Financial Performance - Total interest income for the three months ended June 30, 2022, was $6,431,000, an increase of 4.25% compared to $6,169,000 in the same period of 2021[12]. - Net income for the three months ended June 30, 2022, was $1,684,000, representing a 69.5% increase from $993,000 in the same period of 2021[12]. - Basic and diluted earnings per common share for the three months ended June 30, 2022, were $0.29, compared to $0.17 for the same period in 2021[12]. - Net income for the six months ended June 30, 2022, was $2,745,000, a slight increase from $2,681,000 in the same period of 2021, representing a growth of 2.4%[19]. - For the three months ended June 30, 2022, net income was $1,684,000, compared to $993,000 for the same period in 2021, representing a 69.6% increase[75]. Income and Expenses - Non-interest income for the six months ended June 30, 2022, was $1,452,000, slightly down from $1,503,000 in the same period of 2021[12]. - Total non-interest expense for the three months ended June 30, 2022, was $4,577,000, an increase of 4.13% compared to $4,395,000 in the same period of 2021[12]. - The provision for loan losses decreased to $100,000 for the three months ended June 30, 2022, down from $500,000 in the same period of 2021[12]. - The provision for loan losses was $500,000 for the six months ended June 30, 2022, down from $650,000 in 2021, indicating a decrease of 23.1%[19]. - The provision for income tax expense for the six months ended June 30, 2022, was $2,000, down from $7,000 in 2021[118]. Cash Flow and Investments - Net cash provided by operating activities increased to $4,103,000 for the six months ended June 30, 2022, compared to $3,556,000 in 2021, reflecting a rise of 15.4%[19]. - Net cash used in investing activities was $32,028,000 for the six months ended June 30, 2022, compared to $22,511,000 in 2021, indicating an increase of 42.3%[19]. - Net cash used in financing activities was $12,504,000 for the six months ended June 30, 2022, a decrease from $21,781,000 in 2021, showing a reduction of 42.5%[19]. Securities and Investments - The total amortized cost of debt securities available for sale was $88,407,000, with a fair value of $77,530,000 as of June 30, 2022, reflecting unrealized losses of $11,032,000[33]. - The total debt securities available for sale amounted to $88,797,000, with gross unrealized losses of $1,757,000[34]. - The fair value of securities was $77,540,000 as of June 30, 2022, with a carrying amount of $77,540,000[111]. - The estimated fair value of debt securities available for sale was $77,530,000 as of June 30, 2022, down from $88,797,000 as of December 31, 2021[97][100]. Loan Portfolio and Allowance for Loan Losses - Gross loans receivable totaled $550,218,000 as of June 30, 2022, compared to $519,779,000 at the end of 2021, indicating a growth in the loan portfolio[52]. - The allowance for loan losses increased to $6,747,000 as of June 30, 2022, up from $6,118,000 at the beginning of the year, reflecting a provision of $100,000 for the second quarter[52]. - The ending balance for collectively evaluated loans for impairment was $6,747,000 as of June 30, 2022[52]. - The company reported a total of $4,921,000 in recorded investment for commercial real estate loans with no related allowance as of June 30, 2022[57]. - The total amount of loans classified as substandard as of June 30, 2022, was $6,876,000, compared to $13,653,000 as of December 31, 2021, showing a decrease in risk[64]. Dividends and Stockholder Equity - Cash dividends declared per share increased to $0.16 for the three months ended June 30, 2022, from $0.13 in the same period of 2021[12]. - The Company declared a quarterly cash dividend of $0.18 per share, payable on August 19, 2022, to shareholders of record as of August 2, 2022[119]. - Lake Shore, MHC waived dividends totaling $582,000 and $1.2 million for the three and six months ended June 30, 2022, respectively, cumulatively waiving approximately $17.3 million as of June 30, 2022[119]. Asset Quality and Risk Management - The company maintains conservative underwriting standards for its one- to four-family residential mortgage loans, which are primarily held in the Western New York region[46]. - The company reviews all investment securities on an ongoing basis for the presence of other-than-temporary-impairment (OTTI) with formal reviews performed quarterly[39]. - The total amount of non-accruing loans as of June 30, 2022, was $22,000, with 7 loans in the residential one- to four-family category[70]. - The company's asset classification committee is responsible for monitoring risk ratings and making changes as deemed appropriate, with a focus on individual loan classifications[62]. Miscellaneous - The company expects an increase in the allowance for loan losses due to the adoption of the CECL model, which will require covering the full remaining expected life of the portfolio[26]. - As of June 30, 2022, all Paycheck Protection Program loans originated by the company have been forgiven by the SBA, indicating successful support for small businesses during the pandemic[30]. - The company had $578,268,000 in deposits with an estimated fair value of $579,437,000 as of June 30, 2022[111].

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-51821 LAKE SHORE BANCORP, INC. (Exact name of registrant as specified in its charter) | | | | United | States | | | | | 20-4729288 | | | --- | --- | --- | --- | --- ...

Loan Performance - Lake Shore Bancorp's total loans outstanding at the end of 2021 were $519.779 million, a decrease from $526.632 million at the end of 2020, reflecting a reduction of approximately 1.6%[45] - The company originated a total of $168.609 million in loans during 2021, compared to $188.473 million in 2020, indicating a decline of about 10.5% year-over-year[45] - Principal repayments for total loans in 2021 amounted to $161.462 million, up from $114.156 million in 2020, representing an increase of approximately 41.5%[45] - The loan portfolio composition includes $158.826 million in residential one-to four-family loans and $266.525 million in commercial loans as of December 31, 2021[42] - The company originated $50.081 million in residential one- to four-family loans in 2021, an increase from $43.802 million in 2020, reflecting a growth of approximately 5.8%[45] - The company reported a significant increase in commercial loan originations, with $47.333 million in 2021 compared to $58.403 million in 2020, a decrease of about 19%[45] - As of December 31, 2021, commercial real estate loans totaled $266.5 million, representing 51.3% of the total loan portfolio[47] - Multi-family apartment complexes collateralized loans made up 44.7% of the commercial real estate loan portfolio, totaling $119.0 million[47] - Construction loans amounted to $21.8 million, or 4.2% of the total loan portfolio, as of December 31, 2021[52] - One- to four-family residential loans totaled $158.8 million, representing 30.6% of the total loan portfolio[55] - Home equity loans and lines of credit totaled $48.0 million, accounting for 9.2% of the total loan portfolio[67] - Commercial business loans reached $23.2 million, or 4.5% of the total loan portfolio, as of December 31, 2021[71] - Jumbo loans totaled $10.0 million, representing 6.3% of the one- to four-family residential mortgage portfolio[59] Risk Management - The company sold $13.0 million of long-term fixed-rate residential mortgage loans in 2021 to mitigate long-term interest rate risk[46] - The company retains the majority of loans originated, but sells residential mortgage loans into the secondary market to manage interest rate risk[38] - The allowance for loan losses reflects the evaluation of losses inherent in the loan portfolio, with provisions charged to income[96] - The allowance for loan losses at the end of 2021 was $6,118,000, an increase from $5,857,000 at the end of 2020[102] - The allocated component of the allowance for loan losses was $5,894,000, representing 96.3% of the total allowance, while the unallocated component was $224,000, or 3.7%[102] - The commercial real estate loans accounted for 71.5% of the total allowance for loan losses in 2021, up from 69.2% in 2020[102] Economic Environment - The local economy's growth, particularly in Erie and Chautauqua counties, is crucial for the company's future growth possibilities, as it significantly depends on population, income levels, deposits, and housing starts[200] - The COVID-19 pandemic has had a significant economic impact on the communities where the company operates, affecting borrowers and depositors, with ongoing volatility expected[201][202] - High inflation levels are currently affecting the national economy, with the consumer price index increasing to 7.0% in 2021, which could adversely impact the company's business and results of operations[203] - Changes in the Federal Reserve Board's monetary or fiscal policies could negatively affect the company's results of operations and financial condition, as these policies influence bank loans, investments, and deposits[204] Compliance and Regulations - The company must comply with the Truth in Lending Act and other federal laws governing credit transactions and consumer protection[183] - Lake Shore Savings is classified as "well-capitalized" with at least 5% leverage capital and 6.5% common equity Tier 1 risk-based capital[155] - Lake Shore Savings Bank is in compliance with the loans-to-one borrower limitations, which restrict loans to a single borrower to 15% of unimpaired capital and surplus[158] - The bank maintained a liquidity ratio of liquid assets not subject to pledge as a percentage of deposits and borrowings of 15% or greater[165] - The company has exercised a one-time opt-out regarding the inclusion of unrealized gains and losses on certain "available-for-sale" securities for regulatory capital calculations[145] - The minimum capital standards require a common equity Tier 1 capital ratio of 4.5% of risk-weighted assets, with a well-capitalized status requiring a CET1 ratio of 6.5%[144] Employee and Operational Policies - The company employed 104 full-time and 3 part-time employees, with 21.1% having been employed for 15 years or longer[131] - The company has implemented safety protocols to ensure employee safety during the COVID-19 pandemic, prioritizing health and wellness[133] - The company provides a comprehensive benefits package, including health, dental, life, and disability insurance, along with a generous paid time off policy[134] Cybersecurity and Data Security - A data security incident in November 2021 led to unauthorized access to certain data, prompting the company to enhance its security measures and notify affected customers[207][209] - The company maintains insurance coverage, including cybersecurity insurance, but the coverage may not fully cover all losses incurred from incidents like the November 2021 breach[208] - The company relies heavily on communications and information systems, making it vulnerable to hardware and cybersecurity issues, which could lead to operational impairments and financial losses[210]

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-51821 LAKE SHORE BANCORP, INC. (Exact name of registrant as specified in its charter) United States 20-4729288 (State or other jurisdiction of incorporation or o ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-51821 LAKE SHORE BANCORP, INC. (Exact name of registrant as specified in its charter) | | | | United | States | | | 20-4729288 | | | | --- | --- | --- | --- | --- | - ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-51821 LAKE SHORE BANCORP, INC. (Exact name of registrant as specified in its charter) | United States | | 20-4729288 | | --- | --- | --- | | (State or other jurisdic ...

Loan Portfolio and Originations - Total loans outstanding at the end of 2020 increased to $526.6 million, up from $471.5 million at the end of 2019, representing an increase of 11.7%[52] - Loan originations for 2020 totaled $188.5 million, a 11.4% increase compared to $169.2 million in 2019[52] - Commercial real estate loans reached $257.3 million, accounting for 48.9% of the total loan portfolio as of December 31, 2020[54] - One- to four-family residential loans totaled $150.7 million, representing 28.6% of the total loan portfolio[62] - Construction loans amounted to $28.9 million, making up 5.5% of the total loan portfolio[59] - The company originated $26.9 million in Paycheck Protection Program (PPP) loans, which are 100% guaranteed by the SBA[53] - Jumbo loans totaled $9.0 million, or 5.9% of the one- to four-family residential mortgage portfolio[66] - As of December 31, 2020, home equity loans and lines of credit totaled $47.6 million, representing 9.0% of the total loan portfolio[74] - At December 31, 2020, commercial business loans amounted to $40.8 million, or 7.7% of the total loan portfolio[77] - Consumer loans totaled $1.4 million, or less than 1% of the total loan portfolio, as of December 31, 2020[80] Loan Repayments and Modifications - The company reported principal repayments of $114.2 million in 2020, compared to $86.6 million in 2019, reflecting a 31.8% increase[52] - The company implemented a loan modification program in 2020, allowing customers affected by COVID-19 to defer loan payments, with expectations that the number of modifications will decrease in 2021[95] Allowance for Loan Losses - The allowance for loan losses increased to $5,857 million in 2020 from $4,267 million in 2019, reflecting adjustments for qualitative factors due to the uncertain impact of COVID-19 on economic conditions and borrowers' ability to repay loans[106] - The total allocated allowance for loan losses was $5,707 million, representing 97.4% of the total allowance, with commercial loans accounting for 69.2% of the allocated allowance[105] - The percentage of loans classified as "Substandard" increased from 10.2% in 2019 to 5.9% in 2020 for residential, one- to four-family loans, while commercial loans saw a decrease from 62.9% to 69.2%[105] - The company maintains a general component of the allowance for loan losses based on historical loss experience, adjusted for qualitative and environmental factors, reflecting ongoing economic conditions[102] Investment Portfolio - The investment portfolio is designed to manage interest rate sensitivity and maintain liquidity, with a focus on U.S. Government obligations and mortgage-backed securities[108] - The company’s investment policy requires routine monitoring of the investment portfolio to mitigate credit quality risks[108] - The fair values of available-for-sale securities are based on a market approach, with unrealized gains and losses reported as a separate component of equity[111] - The company recaptured $73,000 and $54,000 of prior year other-than-temporary impairment charges in 2020 and 2019, respectively[116] Deposits and Borrowings - At December 31, 2020, the Bank had $106.1 million in time deposits with remaining terms to maturity of less than one year, compared to $90.1 million in 2019[125] - The Bank had $89.4 million in uninsured deposits exceeding the FDIC insurance limit of $250,000 as of December 31, 2020[126] - Long-term borrowings from the Federal Home Loan Bank of NY decreased from $34.7 million in 2019 to $29.8 million in 2020[126] - The Bank's total time deposits at December 31, 2020, amounted to $159.3 million, a decrease from $170.5 million in 2019[125] - The Bank's cash flows from operations, loan repayments, and mortgage-backed securities principal repayments are stable sources of funds[120] Regulatory Compliance and Capital Requirements - The bank raised the eligibility for the 18-month exam cycle from $1 billion to $3 billion in assets[146] - The community bank leverage ratio was established at a minimum of 9% for institutions under $10 billion in assets, with a temporary reduction to 8% due to the CARES Act[152][154] - As of December 31, 2020, Lake Shore Savings met the criteria for being considered "well-capitalized"[156] - The bank maintained a ratio of liquid assets not subject to pledge as a percentage of deposits and borrowings of 15% or greater[167] - The bank's capital requirements assign higher risk weights to asset categories believed to present greater risk, with a risk weight of 100% assigned to commercial and consumer loans[150] - The OCC requires savings banks to maintain detailed records of all transactions with affiliates to ensure compliance with regulations[171] Employee and Community Engagement - As of December 31, 2020, 20.8% of employees had been with the Bank for 15 years or longer, indicating strong employee retention[131] - The Bank's employee health care premiums are competitive, with employees covering 20% of the premiums[136] - The Bank's management emphasizes employee safety and wellness, implementing protocols in response to the COVID-19 pandemic[133] - Lake Shore Savings received a "satisfactory" rating under the Community Reinvestment Act in its most recent federal examination[169] Impact of COVID-19 and Economic Conditions - The CARES Act provided over $2 trillion to combat the COVID-19 pandemic, impacting the company's operations significantly[184] - The Federal Reserve Board reduced reserve requirement ratios to zero in March 2020, with no plans to re-impose them unless conditions warrant[187] Corporate Governance and Compliance - Lake Shore Bancorp common stock is registered under the Securities Exchange Act of 1934 and is subject to various regulatory requirements[202] - The Sarbanes-Oxley Act requires the CEO and CFO of Lake Shore Bancorp to certify the accuracy of quarterly and annual reports filed with the SEC[204] - Lake Shore Bancorp is enhancing its policies and procedures to ensure compliance with Sarbanes-Oxley regulations[204]

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 000-51821 LAKE SHORE BANCORP, INC. (Exact name of registrant as specified in its charter) | United States | | 20-4729288 | | --- | --- | --- | | (State or other juri ...

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 ☐ TRANSITION REPORT P ...

PART I - Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's total assets grew to **$628.3 million** by March 31, 2020, a **2.9%** increase from year-end 2019, while net income for Q1 2020 decreased **18.6%** to **$731,000** due to a **$500,000** increase in loan loss provision, with **$480,000** attributed to **COVID-19** impacts [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of March 31, 2020, total assets increased **2.9%** to **$628.3 million**, driven by a **$15.3 million** rise in cash and **$2.5 million** in net loans, alongside a **3.7%** increase in total deposits to **$501.2 million** and a **1.2%** rise in stockholders' equity to **$83.8 million** Consolidated Balance Sheet Highlights (Unaudited) | Financial Metric | March 31, 2020 ($ thousands) | December 31, 2019 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 45,539 | 30,289 | 50.3% | | Loans receivable, net | 473,354 | 470,816 | 0.5% | | **Total Assets** | **628,326** | **610,869** | **2.9%** | | Total Deposits | 501,199 | 483,476 | 3.7% | | **Total Liabilities** | **544,495** | **528,029** | **3.1%** | | **Total Stockholders' Equity** | **83,831** | **82,840** | **1.2%** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2020 decreased **18.6%** to **$731,000** from **$898,000** in Q1 2019, primarily due to a **566.7%** increase in provision for loan losses to **$500,000**, despite a **7.9%** growth in net interest income to **$4.9 million** Q1 2020 vs. Q1 2019 Income Statement (Unaudited) | Metric | Three Months Ended Mar 31, 2020 ($ thousands) | Three Months Ended Mar 31, 2019 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | 4,896 | 4,538 | 7.9% | | Provision for Loan Losses | 500 | 75 | 566.7% | | Non-Interest Income | 455 | 589 | -22.8% | | Non-Interest Expenses | 3,998 | 4,003 | -0.1% | | **Net Income** | **731** | **898** | **-18.6%** | | **Basic and diluted EPS** | **$0.12** | **$0.15** | **-20.0%** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended March 31, 2020, the company experienced a net increase in cash and cash equivalents of **$15.3 million**, primarily driven by **$16.2 million** in net cash from financing activities, offset by **$2.3 million** used in investing activities Cash Flow Summary (Unaudited) | Activity | Three Months Ended Mar 31, 2020 ($ thousands) | Three Months Ended Mar 31, 2019 ($ thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 1,386 | 303 | | Net Cash Used in Investing Activities | (2,319) | (6,780) | | Net Cash Provided by Financing Activities | 16,183 | 6,832 | | **Net Increase in Cash and Cash Equivalents** | **15,250** | **355** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including the adoption of **CARES Act** provisions for **TDR** and the deferral of **CECL** adoption, while also disclosing a **$480,000** additional loan loss provision due to **COVID-19**, **$103.1 million** in loan deferrals, and **$20.3 million** in **PPP** loan applications - The company elected to adopt provisions of the **CARES Act**, which allows it to not apply **troubled debt restructuring** (**TDR**) accounting to loan modifications related to **COVID-19** for qualifying borrowers[22](index=22&type=chunk)[24](index=24&type=chunk) - The **effective** date for adopting the new **Current Expected Credit Loss** (**CECL**) standard (**ASU 2016-13**) has been deferred to January 1, 2023[25](index=25&type=chunk)[27](index=27&type=chunk) - The projected economic impact of **COVID-19** resulted in an additional **$480,000** provision for loan losses for the quarter, primarily due to adjustments in qualitative factors to account for economic uncertainty[46](index=46&type=chunk) - As of May 11, 2020, the company had executed principal and interest payment deferrals on **219 loans** with outstanding balances of **$103.1 million** in connection with **COVID-19** relief[71](index=71&type=chunk) - The company is participating in the **SBA's Paycheck Protection Program** (**PPP**) and, as of May 11, 2020, had processed approximately **282 applications** for up to **$20.3 million** in **loans**[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant impact of the **COVID-19** pandemic, which led to a **$425,000** year-over-year increase in the provision for loan losses and a corresponding **18.6%** drop in net income to **$731,000** for Q1 2020, with responses including **$103.1 million** in loan deferrals and **PPP** participation, while net interest margin declined **18 basis points** to **3.42%**, and the bank remains **well-capitalized** with a **Community Bank Leverage Ratio** of **12.85%** [Recent Market Conditions and Pandemic Response](index=48&type=section&id=Recent%20Market%20Conditions%20and%20Pandemic%20Response) The company responded to **COVID-19** by implementing social distancing, promoting digital banking, offering payment deferrals for **219 loans** totaling **$103.1 million**, identifying **$57.0 million** in loans to at-risk industries, and actively participating in the **SBA's Paycheck Protection Program** (**PPP**) Loan Modifications by Type (as of May 11, 2020) | Loan Type | Number of Loans | Balance Outstanding ($ thousands) | | :--- | :--- | :--- | | Commercial real estate | 86 | 82,393 | | Residential, one- to four-family | 79 | 10,163 | | Commercial business | 30 | 8,495 | | Home Equity | 22 | 2,032 | | Consumer | 2 | 9 | | **Total** | **219** | **103,092** | Exposure to 'At Risk' Industries (as of March 31, 2020) | Industry Type | Balance Outstanding ($ thousands) | % of Total Loans Outstanding | | :--- | :--- | :--- | | Retail (non-essential) | 17,713 | 3.7% | | Eating and Drinking Establishments | 16,040 | 3.4% | | Hotels/Accommodations | 11,276 | 2.4% | | Construction Trades | 8,202 | 1.7% | | Dental/Medical Practices/Gyms | 3,731 | 0.8% | | **Total** | **56,962** | **12.0%** | - The company is participating in the **SBA Paycheck Protection Program** (**PPP**), processing **282 applications** for up to **$20.3 million** in **loans** as of May 11, 2020[131](index=131&type=chunk) [Comparison of Financial Condition](index=54&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031%2C%202020%20and%20December%2031%2C%202019) Total assets grew **2.9%** to **$628.3 million** by March 31, 2020, driven by increased cash and net loans, while total deposits rose **3.7%** to **$501.2 million**, and non-performing loans increased **12.4%** to **$4.0 million**, representing **0.84%** of total net loans - Total assets increased by **$17.5 million**, or **2.9%**, from December 31, 2019 to March 31, 2020[142](index=142&type=chunk) - Total non-performing loans increased by **$439,000**, or **12.4%**, to **$4.0 million** at March 31, 2020, primarily due to an increase in non-performing residential and home equity loans[148](index=148&type=chunk) - The allowance for loan losses increased to **1.01%** of total net loans, up from **0.88%** in the prior year period[149](index=149&type=chunk) [Comparison of Results of Operations](index=58&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) Net income for Q1 2020 decreased **18.6%** to **$731,000** due to a **$425,000** increase in loan loss provision to **$500,000** from **COVID-19** uncertainty, despite an **11.1%** rise in net interest income to **$6.3 million** - Net income decreased by **$167,000**, or **18.6%**, to **$731,000** for Q1 2020 compared to Q1 2019[153](index=153&type=chunk) - The provision for loan losses increased to **$500,000** in Q1 2020 from **$75,000** in Q1 2019, with the increase primarily due to adjusting qualitative factors for the uncertain economic impact of the **COVID-19** pandemic[161](index=161&type=chunk) - Net interest margin decreased by **18 basis points** to **3.42%** for Q1 2020 from **3.60%** for Q1 2019, impacted by a decrease in the average yield on interest-earning assets[141](index=141&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$109.5 million** in **FHLBNY** borrowing capacity and elected the **CBLR** framework, reporting a **12.85% CBLR** as of March 31, 2020, which deems the bank **well capitalized** - The Bank elected to be subject to the new **Community Bank Leverage Ratio** (**CBLR**) framework, which was set at **9.00%** for Q1 2020[180](index=180&type=chunk) - As of March 31, 2020, the Bank's **CBLR** was **12.85%**, deeming it to be in compliance and considered **well capitalized**[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Lake Shore Bancorp, Inc. is not required to provide these disclosures - This section is not required as the Company qualifies as a smaller reporting company[183](index=183&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the **CEO** and **CFO**, concluded the company's disclosure controls and procedures were **effective** as of March 31, 2020, with **no material changes** to internal control over financial reporting during the quarter - The **CEO** and **CFO** concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by this report[184](index=184&type=chunk) - **No material changes** to internal control over financial reporting were identified during the quarter ended March 31, 2020[185](index=185&type=chunk)[187](index=187&type=chunk) PART II - Other Information [Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting the significant and uncertain economic impact of the **COVID-19** pandemic, including potential declines in demand, increased loan delinquencies, declining collateral values, higher loan loss provisions, and pressure on net interest margin - The primary updated risk factor relates to the **COVID-19** outbreak and its potential adverse effects on the company's financial condition and operations[189](index=189&type=chunk) - Specific risks from the pandemic include: * Decline in demand for products and services * Increased loan delinquencies, problem assets, and foreclosures * Decline in collateral value, especially real estate * Potential for further increases in the allowance for loan losses * Reduction in net interest margin due to near-zero federal funds rates * Increased cybersecurity risks from remote work[190](index=190&type=chunk)[196](index=196&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2020, the company repurchased **26,900 shares** of common stock at an average price of **$14.00 per share** under an existing plan, with **70,139 shares** remaining available for repurchase as of March 31, 2020 Q1 2020 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2020 | - | $ - | | February 2020 | 8,800 | $15.46 | | March 2020 | 18,100 | $13.28 | | **Total Q1 2020** | **26,900** | **$14.00** | - As of March 31, 2020, **70,139 shares** were remaining to be repurchased under the existing stock repurchase program[194](index=194&type=chunk) [Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including **CEO** and **CFO** certifications pursuant to the **Sarbanes-Oxley Act of 2002** and **XBRL** interactive data files - Exhibits filed include **CEO** and **CFO** certifications under **Sarbanes-Oxley Sections 302** and **906**, as well as **XBRL** data files[197](index=197&type=chunk)