Executive Summary

Solid sequential quarter: EPS rose to $0.24 from $0.19 on higher net interest income and lower non-interest expense; NIM ticked up to 3.28% (first uptick in well over a year), while efficiency improved to 77.96% .
Year-over-year headwinds persisted as higher deposit costs compressed spread vs. Q3’23: net interest income fell vs. last year and NIM remained below 2023 levels (3.28% vs. 3.74%), though sequential trends improved .
Funding and balance sheet progress: repaid $25.0M of FHLB borrowings YTD and let $16.0M brokered CDs roll off, supported by 2.2% organic deposit growth; uninsured deposits remained modest at 13.4% and the bank stayed well-capitalized (Tier 1 leverage 13.37%, Total risk-based 18.85%) .
Dividend maintained at $0.18 following Federal Reserve approval—paid Nov 8 to holders of record Nov 4—signaling regulatory comfort with capital and earnings trajectory despite OCC/Fed agreements still referenced in filings .

What Went Well and What Went Wrong

What Went Well
- Sequential earnings momentum: “quarterly earnings growth and an uptick in the net interest margin for the first time in well over a year,” per CEO Kim Liddell; NIM rose 14 bps Q/Q to 3.28% and efficiency improved to 77.96% .
- Cost discipline: non-interest expense fell Q/Q and Y/Y; FDIC insurance and advertising were notable declines Y/Y; professional services costs also trended lower .
- Balance sheet de-risking: reduced wholesale funding (FHLB) by $25.0M YTD and non-renewed $16.0M brokered CDs while growing organic deposits by 2.2% YTD .
What Went Wrong
- YoY margin pressure from funding costs: interest expense rose sharply Y/Y with deposit mix shift to time and money market; spread decreased to 2.67% (vs. 3.32% in Q3’23) and NIM to 3.28% (vs. 3.74%) .
- Nonperformers ticked up: NPAs/Assets rose to 0.57% (vs. 0.47% at YE’23) driven by higher non-accruals; ACL/loans declined to 1.01% reflecting lower modeled loss factors .
- No incremental guidance or call: absence of a Q3 earnings call and formal guidance limits near-term visibility on pace of further NIM expansion or expense trajectory .

Financial Results

Quarterly P&L and margin metrics (oldest → newest)

Metric	Q1 2024	Q2 2024	Q3 2024
Net Income ($M)	$1.014	$1.116	$1.332
Diluted EPS ($)	$0.17	$0.19	$0.24
Net Interest Income ($M)	$5.133	$5.206	$5.383
Non-Interest Income ($M)	$0.707	$0.738	$0.791
Non-Interest Expense ($M)	$4.995	$4.897	$4.813
Net Interest Margin (%)	3.10%	3.14%	3.28%

Select YoY comparison (Q3 2024 vs. Q3 2023)

Metric	Q3 2023	Q3 2024
Diluted EPS ($)	$0.27	$0.24
Net Interest Income ($M)	$6.295	$5.383
Net Interest Margin (%)	3.74%	3.28%
Efficiency Ratio (%)	75.30%	77.96%

Key Balance Sheet & Capital KPIs (period-end; oldest → newest)

KPI	Mar 31, 2024	Jun 30, 2024	Sep 30, 2024
Total Assets ($M)	$717.6	$711.0	$697.6
Loans, net ($M)	$555.5	$544.3	$539.0
Deposits ($M)	$594.7	$589.4	$587.6
Borrowings ($M)	$25.3	$23.3	$10.3
Uninsured Deposits (% of total)	12.6%	12.0%	13.4%
Tier 1 Leverage Ratio (%)	12.87%	13.02%	13.37%
Total Risk-Based Capital Ratio (%)	18.13%	18.64%	18.85%

Notes:

Sequential Q3 improvements were driven by higher asset yields and lower average interest-bearing liabilities (from reduced FHLB borrowings), alongside lower FDIC/professional service costs .
YoY pressure reflects deposit repricing and mix shifts (more time/MM accounts), partially offset by higher loan yields .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash Dividend per Share	Regular/common	$0.18 declared Q2 and Q1 (with Fed approvals)	$0.18 declared Oct 23; paid Nov 8; Fed approval Sept 30	Maintained
Financial Guidance (revenue/margins/OpEx)	Q4 trajectory	Not provided	Not provided	N/A

No formal quantitative guidance (revenue, margins, OpEx, tax rate) was issued in the Q3 materials .

Earnings Call Themes & Trends

No Q3 2024 earnings call transcript was available in the company document set. Thematic evolution below synthesizes management commentary from the Q1 and Q2 filings/press releases and the Q3 press release/10-Q.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2024)	Trend
Net Interest Margin	Q1: NIM 3.10%; Q2: 3.14%	NIM up to 3.28%—first uptick in well over a year	Improving sequentially
Funding costs/deposit mix	Rising deposit costs; shift to time/MM; brokered CD reductions started	Further brokered CD roll-off; deposit rate paid down 1 bp Q/Q; interest expense down Q/Q	Moderating sequentially; still elevated YoY
Wholesale borrowings	Q1: $25.3M; Q2: $23.3M	$10.3M at Q3; $25M repaid YTD	De-risking continues
Credit quality/ACL	NPLs and NPAs ticked up; ACL driven by models and macro	NPAs/Assets 0.57%; ACL/loans 1.01%; provision credit due to lower modeled factors	Stable to slightly weaker NPAs; ACL calibrated down
Regulatory/legal	OCC Consent Order and Fed Written Agreement referenced; dividends require approvals	Fed approval for dividend in Sept; constraints still noted	Incremental progress (dividends) within oversight

Management Commentary

“I am pleased to report a solid quarter of financial results, marked by quarterly earnings growth and an uptick in the net interest margin for the first time in well over a year… amid challenging market conditions.” — Kim C. Liddell, President & CEO .
Q2 context: “We continue to remain disciplined and focused on executing our strategic plan and it is beginning to bear results.” — Kim C. Liddell .

Q&A Highlights

No earnings call or Q&A transcript was available for Q3 2024 in the company’s disclosures [ListDocuments earnings-call-transcript returned none].

Estimates Context

Wall Street consensus estimates from S&P Global were not available for LSBK (analyst coverage appears limited), so we cannot provide EPS/revenue vs. consensus comparisons for Q3 2024 (Values retrieved from S&P Global were unavailable due to access limits).
Given improving sequential NIM and lower operating expense, estimate revisions—where coverage exists—may tilt modestly upward for near-term EPS; however, YoY funding-cost pressure and NPAs warrant conservatism .

Key Takeaways for Investors

Sequential inflection in NIM and expense control are the near-term catalysts; watch for follow-through in Q4 as deposit betas stabilize and wholesale funding remains low .
Funding strategy is de-risking earnings: brokered CD roll-off and FHLB repayment reduce interest expense sensitivity, supporting margin resilience if rates remain range-bound .
Asset quality remains manageable but trending modestly weaker; monitor NPAs and any migration in CRE/non-accruals alongside the lower ACL ratio .
Capital headroom is strong (Tier 1 leverage 13.37%, TRBC 18.85%); dividend continuity with Fed approval underscores regulatory progress and earnings durability .
Medium-term thesis: disciplined cost takeout plus balance sheet remixing can sustain mid-single-digit EPS progression absent a sharp rate reset; upside if deposit costs recede faster than expected .
Risk skew: elevated deposit costs and competitive pressure, potential credit normalization, and ongoing regulatory constraints could cap upside until further demonstrable improvement .

Sources: Q3 2024 press release and attached tables ; Q3 2024 8-K ; Q3 2024 10-Q ; Q2 2024 press release ; Q3 dividend press release .

LAKE SHORE BANCORP, INC. (LSBK)·Q3 2024 Earnings Summary