 DUNKIRK, N.Y., July 27, 2020 GLOBE NEWSWIRE -- Lake Shore Bancorp, Inc. the Company NASDAQ: LSBK, the holding company for Lake Shore Savings Bank the Bank, reported unaudited net income of 1.4 million, or 0.23 per diluted share, for the second quarter of 2020 compared to net income of 805,000, or 0.13 per diluted share, for second quarter of 2019. For the first six months of 2020, the Company reported unaudited net income of 2.1 million, or 0.35 per diluted share, compared to 1.7 million, or 0.28 per diluted share, for the first six months of 2019. COVID 19 Pandemic UpdateDuring the second quarter of 2020, the Company continued to be actively engaged in its response to the COVID-19 pandemic. The Bank originated 245 Small Business Administration SBA Paycheck Protection Program PPP loans for our customers, which totaled 26.2 million and represented the retention of over 3,300 jobs. We funded 17.9 million of PPP loans directly and the remaining 8.3 million was funded indirectly via our partnership with Pursuit, a SBA lender that operates in the northeast.The Company implemented a loan modification program for customers impacted by the pandemic, in line with regulatory guidance, allowing customers to defer loan payments. During the second quarter of 2020, we approved loan payment deferral requests of up to 90 days on 219 loans, representing 103.1 million, or 21.1, of the Banks loan portfolio as of June 30, 2020. The majority of these customers have not yet requested a second 90 day deferral period, with the exception of 17 loans, or 18.9 million, which have received an additional 90 day deferral to end on September 30, 2020.While many industries have and will continue to experience adverse impacts as a result of the COVID-19 pandemic, the Companys management team has considered the categories below to be at risk of significant impact. The table below identifies these segments as well as the outstanding loan balance, committed loan balance, and current outstanding payment deferrals for each industry type. At June 30, 2020 dollars in thousands Industry TypeNumber of Loans Balance Outstanding of Total Loans Outstanding Loan Commitments Total Outstanding with Payment Deferrals Retail non-essential19 17,1573.5 509 2,041 Eating and Drinking Establishments39 16,4153.4 3,210 9,881 Construction Trades50 11,7802.4 9,253 - HotelsAccommodations17 11,1902.3 854 6,903 Dental and Medical Practices and Gyms13 3,7180.8 2,058 193 138 60,26012.4 15,884 19,018 The Company continues to place a high priority on ensuring the safety and health of its customers and employees and has put in place physical enhancements, strict social distancing protocols, and enhanced cleaning measures. The Company encourages its customers to use the branch drive-thru lanes, mobile banking and online banking services or one of its 1,900 surcharge free ATM locations to promote appropriate social distancing protocols. As we continue to manage through the ongoing pandemic, we have been successful in delivering uninterrupted service and support, both in-branch and online, to all of our customers, stated Daniel P. Reininga, President and Chief Executive Officer. We continue to take every precaution necessary to ensure the safety of our customers, employees, and vendor partners. Our ability to assist customers with the origination of PPP loans during this challenging economic environment reflects the Banks continued focus on Putting People First and we are proud of the efforts put forth by our loan officers to meet the needs of our community members.2020 Second Quarter and Year to Date Financial Highlights: Net interest income increased 355,000, or 7.6, for the three months ended June 30, 2020 when compared to the three months ended June 30, 2019 and 713,000, or 7.7, for the first six months of 2020 when compared to the first six months of 2019 primarily due to an increase in average commercial real estate and commercial construction loans; Provision for loan losses for the six months ended June 30, 2020 was 825,000, a 400,000 increase in comparison to the prior year period, primarily reflecting the economic uncertainty relating to COVID-19. The resulting allowance was 1.09 of the total loan portfolio excluding the 23.1 million of PPP loans which were outstanding as of June 30, 2020 and are 100 guaranteed by the SBA; Loans, net totaled 487.9 million at June 30, 2020, compared to 470.8 million at December 31, 2019, an increase of 17.1 million, or 3.6, primarily due to the origination of PPP loans during the second quarter of 2020; Total assets at June 30, 2020 increased 66.9 million, or 11.0, to 677.8 million when compared to December 31, 2019 primarily due to the origination of PPP loans and an increase in deposits; and Total deposits grew by 67.0 million, or 13.9, to 550.5 million at June 30, 2020 when compared to December 31, 2019, primarily due to the PPP loan proceeds being placed in customers deposit accounts and growth in core deposits.Although our year to date results have been impacted by the marked decline in interest rates and an increased provision for loan losses, our strong capital levels will allow us to appropriately manage the risks presented by the current economic environment, stated Mr. Reininga. We remain focused on meeting the needs of our community members with a high quality, multi-channel service model that provides an opportunity for existing and new customers to obtain loans or to place deposits by means of our multiple and diversified, high quality banking products and services. Net Interest IncomeSecond quarter 2020 net interest income increased 355,000, or 7.6, to 5.0 million as compared to 4.7 million for the second quarter 2019. The first six months of 2020 net interest income increased 713,000, or 7.7, to 9.9 million as compared to 9.2 million for the first six months of 2019.Interest income for the second quarter of 2020 was 6.1 million, an increase of 192,000, or 3.2, compared to 5.7 million for second quarter 2019. The increase was attributable to a 94.0 million, or 18.0, increase in the average balance of interest-earning assets during second quarter 2020 as compared to the second quarter 2019. The increase in the average balance of interest-earning assets was primarily due to growth in the average balance of cash and cash equivalents, commercial real estate, commercial construction and PPP loans.Interest income for the first six months of 2020 was 12.4 million, an increase of 821,000, or 7.1, compared to 11.6 million for the first six months of 2019. The increase was attributable to an 81.5 million, or 15.9, increase in the average balance of interest-earning assets during the six month period ended June 30, 2020 as compared to the six month period ended June 30, 2019. The increase in the average balance of interest-earning assets was primarily due to growth in the average balance of cash and cash equivalents, commercial real estate, commercial construction and PPP loans.Second quarter 2020 interest expense was 1.1 million, a decrease of 163,000, or 12.8, from 1.3 million for the second quarter 2019 primarily due to a decrease in interest paid on deposit accounts. During the second quarter of 2020, there was a 32 basis points decrease in the average interest rate paid on deposit accounts as a result of a decrease in market interest rates since June 30, 2019. The decrease was partially offset by a 60.1 million, or 15.3, increase in average interest bearing deposits during the 2020 second quarter as compared to the 2019 second quarter. The increase in the average balance of interest-bearing deposits was due to an increase in core deposit accounts primarily through organic growth and the deposit of PPP funds and government stimulus funds into our customers deposit accounts. Interest expense was impacted to a lesser extent by a 42,000 increase in interest paid on borrowings due to a 10.0 million increase in the average balance of borrowings during second quarter 2020 as compared to the 2019 second quarter.The first six months of 2020 interest expense was 2.5 million, an increase of 108,000, or 4.5, from 2.4 million for the first six months of 2019 primarily due to an increase in interest paid on long-term borrowings. Interest expense paid on long-term borrowings increased by 69,000 due to an 8.9 million increase in the average balance of borrowings during the first six months of 2020 as compared to the first six months of 2019. The increase in the average balance was due to additional borrowings drawn by the Bank to take advantage of low, fixed interest rates to fund loan growth and mitigate interest rate risk. Interest expense was also impacted by a 55.0 million, or 14.2, increase in average interest bearing deposits during the six month period ended June 30, 2020 as compared to the six month period ended June 30, 2019. The increase in the average balance of interest-bearing deposits was due to an increase in core deposit accounts primarily through organic growth and the deposit of PPP funds and government stimulus payments into our customers deposit accounts.Non-Interest IncomeNon-interest income was 608,000 for the second quarter of 2020, an increase of 62,000, or 11.4, as compared to the same quarter in the prior year. The increase was primarily due to an 110,000 increase in gains on the sale of loans and a 58,000 decrease in unrealized losses on interest rate swaps and equity securities partially offset by a 102,000 decrease in service charges and fees. 