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The Dunkirk-based parent of Lake Shore Savings Bank said net income fell to $602,000, or 10 cents per share, from $867,000, or 14 cents per share, in the same period a year ago.
Results for the third quarter a year ago included $179,000 in earnings from a derivative investment designed to protect the bank against falling interest rates. That was sold in January 2009. Without that, net income fell 12.5 percent, or $86,000.
Federal Deposit Insurance Corp. assessments soared to $103,000 from $10,000 a year ago because of higher premiums mandated by the agency on all banks to recapitalize the deposit insurance fund that has been depleted by 99 bank failures this year. Lake Shore also applied credits from 2007 against its 2008 premiums.
Additionally, salary and benefit expenses rose by $214,000 because of annual raises, higher health insurance costs and additional staff for a new branch in Kenmore that opened in December. The bank also received $71,000 in credits for 401(k) plan forfeitures a year ago.
"Even though earnings were lower this quarter compared to the same period last year, our bank operations have continued to show positive results," CEO David C. Mancuso said in a news release. He cited record loan originations so far this year and a higher market share in Erie County, and said he expected the Kenmore office will be profitable within 18 months.
Net interest income from taking deposits and making loans rose 2.5 percent to $2.94 million, as the profit margin fell. Loans grew 7.3 percent to $258 million, while deposits grew 6.4 percent to $311.9 million.
Shares fell 5 cents to $7.75 Friday. The announcements came after the market closed.
Lake Shore, which has nine offices in Chautauqua, Erie and Cattaraugus counties, said it signed a lease to open a new branch in a former First Niagara Bank location on Dick Road in Depew. The office, its 10th, is expected to open in April.
The bank also named Vice Chairman Daniel P. Reininga chief operating officer, effective Jan. 1, 2010. Reininga, 50, has served as a director since 1994 and vice chairman since 2005 and will keep a position on the board. His term expires in 2011.
He is also president of G. H. Graf Realty Corp., a family-owned real estate investment firm in Dunkirk.
Reininga will "assist us in implementing our strategic plan for continued growth and profitability," Mancuso said.
jepstein@buffnews.com
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