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     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, 2025

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No.: 001-42754



LAKE SHORE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Maryland			39-3058424
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)
31 East Fourth Street, Dunkirk, New York			14048
(Address of principal executive offices)			(Zip code)
(716) 366-4070
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	LSBK	The Nasdaq Stock Market LLC

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.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer 	Accelerated filer 
Non-accelerated filer 	Smaller reporting company 
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

There were 7,825,501 shares of the registrant’s common stock, $0.01 par value per share, outstanding at August 8, 2025.

TABLE OF CONTENTS


ITEM		PART I	PAGE

1	FINANCIAL STATEMENTS
	-	Consolidated Statements of Financial Condition as of June 30, 2025 (Unaudited) and December 31, 2024	1
	-	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)	2
	-	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)	3
	-	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)	4
	-	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (Unaudited)	5
	-	Notes to Unaudited Consolidated Financial Statements	6
2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		32
3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		46
4	CONTROLS AND PROCEDURES		46

		PART II

1A	RISK FACTORS		47
2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		47
5	OTHER INFORMATION
6	EXHIBITS		48
SIGNATURES			48

PART I Financial Information

Item 1. Financial Statements

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition


	June 30,			December 31,
	2025			2024
	(Dollars in thousands, except share data)
	(Unaudited)
Assets
Cash and due from banks	$	2,926			$	2,710
Interest earning deposits		72,441				30,421
Cash and Cash Equivalents		75,367				33,131
Securities, at fair value		55,323				56,495
Federal Home Loan Bank stock, at cost		763				1,157
Loans receivable, net of allowance for credit losses of $5,164 in 2025 and $5,133 in 2024		552,389				544,620
Premises and equipment, net		7,325				7,218
Accrued interest receivable		2,878				2,819
Bank-owned life insurance		29,778				29,340
Other assets		11,015				10,724
Total Assets	$	734,838			$	685,504
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Interest bearing	$	536,040			$	476,566
Non-interest bearing		91,459				96,412
Total Deposits		627,499				572,978
Long-term debt		2,000				10,250
Advances from borrowers for taxes and insurance		3,066				3,225
Other liabilities and accrued interest payable		9,389				9,183
Total Liabilities		641,954				595,636
Commitments and Contingencies
Stockholders' Equity
Common stock, $0.01 par value per share, 25,000,000 shares authorized; 6,836,514 shares issued and 5,759,172 shares outstanding at June 30, 2025 and 6,836,514 shares issued and 5,735,226 shares outstanding at December 31, 2024		68				68
Additional paid-in capital		31,568				31,512
Treasury stock, at cost (1,077,342 shares at June 30, 2025 and 1,101,288 shares at December 31, 2024)		(13,099	)			(13,304	)
Unearned shares held by ESOP		(896	)			(938	)
Unearned shares held by compensation plans		(439	)			(311	)
Retained earnings		85,420				82,805
Accumulated other comprehensive loss		(9,738	)			(9,964	)
Total Stockholders' Equity		92,884				89,868
Total Liabilities and Stockholders' Equity	$	734,838			$	685,504

See notes to unaudited consolidated financial statements.

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Income (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
	(Dollars in thousands, except per share data)
	(Unaudited)
Interest Income
Loans, including fees		$	8,469	$	7,693			$	16,222	$	15,279
Investment securities, taxable			151		198				315		405
Investment securities, tax-exempt			217		216				433		433
Interest-earning deposits			270		647				504		1,246
Total Interest Income			9,107		8,754				17,474		17,363
Interest Expense
Deposits			2,948		3,371				5,790		6,615
Long-term debt			28		166				78		386
Finance lease			9		11				19		23
Total Interest Expense			2,985		3,548				5,887		7,024
Net Interest Income			6,122		5,206				11,587		10,339
(Credit) Provision for Credit Losses			—		(285	)			48		(637	)
Net Interest Income After (Credit) Provision for Credit Losses			6,122		5,491				11,539		10,976
Non-Interest Income
Service charges and fees			273		287				510		552
Debit card fees			201		210				388		405
Earnings on bank-owned life insurance			221		220				438		435
Unrealized gain on equity securities			65		—				111		11
Recovery on previously impaired investment securities			1		3				2		3
Earnings on annuity assets			23		—				46		—
Other			16		18				29		39
Total Non-Interest Income			800		738				1,524		1,445
Non-Interest Expense
Salaries and employee benefits			2,854		2,656				5,768		5,413
Occupancy and equipment			615		681				1,291		1,384
Data processing			457		446				916		899
Professional services			251		397				565		724
Telephone and communications			79		104				171		206
FDIC insurance			74		284				146		563
Postage and supplies			57		65				137		140
Advertising			15		16				26		67
Other			223		248				483		496
Total Non-Interest Expense			4,625		4,897				9,503		9,892
Income before Income Taxes			2,297		1,332				3,560		2,529
Income Tax Expense			378		216				585		399
Net Income		$	1,919	$	1,116			$	2,975	$	2,130
Basic and diluted earnings per common share		$	0.34	$	0.19			$	0.53	$	0.36
Dividends declared per share		$	—	$	0.18			$	0.18	$	0.18

See notes to unaudited consolidated financial statements.

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended June 30,
	2025			2024
	(Dollars in thousands)
	(Unaudited)
Net Income	$	1,919		$	1,116
Other Comprehensive Income (Loss), net of tax (expense) benefit:
Unrealized holding gains (losses) on securities available for sale, net of tax (expense) benefit		214			(419	)
Reclassification adjustments related to:
Recovery on previously impaired investment securities included in net income, net of tax expense		(1	)		(2	)
Total Other Comprehensive Income (Loss)		213			(421	)
Total Comprehensive Income	$	2,132		$	695


	Six Months Ended June 30,
	2025			2024
	(Dollars in thousands)
	(Unaudited)
Net Income	$	2,975		$	2,130
Other Comprehensive Income (Loss), net of tax (expense) benefit:
Unrealized holding gains (losses) on securities available for sale, net of tax (expense) benefit		228			(1,217	)
Reclassification adjustments related to:
Recovery on previously impaired investment securities included in net income, net of tax expense		(2	)		(2	)
Total Other Comprehensive Income (Loss)		226			(1,219	)
Total Comprehensive Income	$	3,201		$	911

See notes to unaudited consolidated financial statements.

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity

Three and Six Months Ended June 30, 2025 and 2024 (Unaudited)


								Unearned			Unearned Shares						Accumulated
			Additional					Shares			Held by						Other
	Common		Paid-In		Treasury			Held by			Compensation			Retained			Comprehensive
	Stock		Capital		Stock			ESOP			Plans			Earnings			Loss			Total
	(Dollars in thousands, except per share data)
Balance - January 1, 2025	$	68	$	31,512	$	(13,304	)	$	(938	)	$	(311	)	$	82,805		$	(9,964	)	$	89,868
Net income		—		—		—			—			—			1,057			—			1,057
Other comprehensive income, net of tax expense of $3		—		—		—			—			—			—			13			13
ESOP shares earned (1,984 shares)		—		10		—			21			—			—			—			31
Compensation plan shares granted (27,197 shares)		—		—		256			—			(256	)		—			—			—
Compensation plan shares earned, net of forfeitures (7,813 shares)		—		15		—			—			74			—			—			89
Cash dividends declared ($0.18 per share)		—		—		—			—			—			(361	)		—			(361	)
Common stock repurchased on vesting for payroll taxes (2,151 shares)		—		—		(35	)		—			—			—			—			(35	)
Balance - March 31, 2025		68		31,537		(13,083	)		(917	)		(493	)		83,501			(9,951	)		90,662
Net income		—		—		—			—			—			1,919			—			1,919
Other comprehensive income, net of tax expense of $57		—		—		—			—			—			—			213			213
ESOP shares earned (1,984 shares)		—		9		—			21			—			—			—			30
Compensation plan shares earned, net of forfeitures (5,831 shares)		—		22		—			—			54			—			—			76
Common stock repurchased on vesting for payroll taxes (1,100 shares)		—		—		(16	)		—			—			—			—			(16	)
Balance - June 30, 2025	$	68	$	31,568	$	(13,099	)	$	(896	)	$	(439	)	$	85,420		$	(9,738	)	$	92,884


								Unearned			Unearned Shares						Accumulated
			Additional					Shares			Held by						Other
	Common		Paid-In		Treasury			Held by			Compensation			Retained			Comprehensive
	Stock		Capital		Stock			ESOP			Plans			Earnings			Loss			Total
	(Dollars in thousands, except per share data)
Balance - January 1, 2024	$	68	$	31,456	$	(13,760	)	$	(1,023	)	$	(39	)	$	78,956		$	(9,385	)	$	86,273
Net income		—		—		—			—			—			1,014			—			1,014
Other comprehensive loss, net of tax benefit of $211		—		—		—			—			—			—			(798	)		(798	)
ESOP shares earned (1,984 shares)		—		2		—			21			—			—			—			23
Compensation plan shares earned, net of forfeitures (1,086 shares)		—		5		—			—			10			—			—			15
Common stock repurchased on vesting for payroll taxes (1,504 shares)		—		—		(17	)		—			—			—			—			(17	)
Balance - March 31, 2024		68		31,463		(13,777	)		(1,002	)		(29	)		79,970			(10,183	)		86,510
Net income		—		—		—			—			—			1,116			—			1,116
Other comprehensive loss, net of tax benefit of $112		—		—		—			—			—			—			(421	)		(421	)
ESOP shares earned (1,984 shares)		—		2		—			21			—			—			—			23
Compensation plan shares granted (52,252 shares)		—		—		559			—			(559	)		—			—			—
Compensation plan shares earned, net of forfeitures (5,720 shares)		—		11		—			—			54			—			—			65
Cash dividends declared ($0.18 per share)		—		—		—			—			—			(361	)		—			(361	)
Balance - June 30, 2024	$	68	$	31,476	$	(13,218	)	$	(981	)	$	(534	)	$	80,725		$	(10,604	)	$	86,932

See notes to unaudited consolidated financial statements.

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
	2025			2024
	(Unaudited)
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,975		$	2,130
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of investment securities		36			36
Net amortization of deferred loan costs		163			266
Provision (credit) for credit losses		48			(637	)
Recovery on previously impaired investment securities		(2	)		(3	)
Unrealized gain on equity securities		(111	)		(11	)
Loss on disposal of premises and equipment		2			—
Depreciation and amortization of premises and equipment		312			385
Deferred income tax (benefit) expense		(105	)		98
Increase in cash surrender value of bank-owned life insurance		(438	)		(435	)
ESOP shares committed to be released		62			46
Stock based compensation expense		164			80
Decrease in accrued interest receivable		(59	)		—
Increase in other assets		(850	)		(191	)
Impairment of foreclosed real estate		—			8
Increase (decrease) in other liabilities		359			(1,230	)
Increase in annuity asset		(46	)		—
Net Cash Provided by Operating Activities		2,510			542
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in debt securities:
Maturities, prepayments and calls		1,537			1,569
Redemptions of Federal Home Loan Bank of New York Stock		394			551
Loan principal collections and originations, net		(7,971	)		11,862
Proceeds from surrender of bank-owned life insurance		651			6,585
Proceeds from sale of foreclosed real estate		—			37
Additions to premises and equipment		(536	)		(6	)
Net Cash (Used in) Provided by Investing Activities		(5,925	)		20,598
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		54,521			(1,529	)
Net (decrease) increase in advances from borrowers for taxes and insurance		(159	)		69
Repayment of long-term debt		(8,250	)		(12,000	)
Repayment of finance lease obligation		(49	)		(45	)
Shares of common stock repurchased on vesting for payroll taxes		(51	)		(17	)
Cash dividends paid		(361	)		(361	)
Net Cash Provided by (Used in) Financing Activities		45,651			(13,883	)
Net Increase in Cash and Cash Equivalents		42,236			7,257
CASH AND CASH EQUIVALENTS - BEGINNING		33,131			53,730
CASH AND CASH EQUIVALENTS - ENDING	$	75,367		$	60,987
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	$	5,946		$	7,602
Income taxes paid	$	759		$	704
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized loss on securities available for sale	$	288		$	(1,539	)

See notes to unaudited consolidated financial statements.

Lake Shore Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

Note 1 – Basis of Presentation and Significant Accounting Policies and Estimates

The interim unaudited consolidated financial statements include the accounts of Lake Shore Bancorp, Inc., a federal corporation (the “Company”, "Lake Shore Bancorp," “us”, “our”, or “we”), and Lake Shore Savings Bank (the “Bank”), its wholly owned subsidiary. All intercompany accounts and transactions of the consolidated subsidiary have been eliminated in consolidation. On July 18, 2025, the Company was succeeded by Lake Shore Bancorp, Inc., a Maryland corporation and the Bank became Lake Shore Bank, a New York chartered commercial bank as more fully described below. The Company refers to Lake Shore Bancorp, Inc., a Maryland corporation on and after July 18, 2025.

The interim unaudited consolidated financial statements included herein as of June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"), and therefore, do not include all information or footnotes necessary for a complete presentation of the consolidated statements of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information and to make the financial statements not misleading. These interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated statements of income for the three and six months ended June 30, 2025 are not necessarily indicative of the results for any subsequent period or the entire year ending December 31, 2025.

The Company's significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 2 of the audited consolidated financial statements and notes thereto for the year ended December 31, 2024 and are contained in the Company's 2024 Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2024, other than the change in accounting estimate described below.

To prepare these unaudited consolidated financial statements in conformity with GAAP, management of the Company made a number of estimates and assumptions relating to the reporting of assets and liabilities and the reporting of revenue and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, securities valuation estimates, and income taxes.

Changes in Accounting Estimates

During the first quarter of 2025, the Company transitioned its allowance for credit losses ("ACL") methodology for loans and unfunded commitments from a vintage model to a discounted cash flow model for all loan segments and loans that are not individually evaluated. In particular, loan-level probability of default ("PD") and loss severity (also referred to as loss given default ("LGD")) is applied to derive a baseline expected loss as of the valuation date. These expected default and severity rates, which are regression-derived and based on benchmark historical performance data, are calibrated to incorporate the Company's reasonable and supportable forecasts of future losses as well as any necessary qualitative adjustments. The loan segments utilized in the discounted cash flow model are consistent with those used in the vintage model and previously disclosed by the Company.

The Company relies on benchmark and peer data when deriving its best estimate of PD, LGD, and other model assumptions, including prepayment and curtailment speeds, with consideration given to a bank's size and geographical region in relation to the Company's when included within respective peer data sets. As part of the Company's estimation process, it assesses the reasonableness of data, assumptions, and model methodology utilized to derive its allowance for credit losses.

For each of the modeled segments, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for various elements including, but not limited to, estimated prepayment speeds, curtailment rates, PD rates, and LGD rates. The Company utilizes national unemployment and gross domestic product ("GDP") forecasts calibrated to peer benchmark data for its reasonable and supportable forecasting of expected default within the cash flow model. To further adjust the allowance for credit losses for expected losses not already reflected within the quantitative component of the calculation, the Company considers qualitative factors for current conditions known as of the valuation date, including, but not limited to, trends in the nature and volume of the loan portfolio, loan concentrations, changes in the experience, ability and depth of the Company’s lending management, and national and local economic conditions.

The allowance for credit losses is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that the Company believes do not share risk characteristics are evaluated on an individual basis. Non-accrual loans are individually evaluated and when deemed appropriate, are assigned a reserve based on such evaluation, which may be determined by the underlying collateral value or the loan-level estimated discounted cash flows. The Company considers several factors in its determination of whether to classify loans as collateral-dependent and individually evaluate such loans. When loans are considered to be collateral-dependent, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

These refinements have been accounted for as changes in accounting estimates under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 250 - Accounting Changes and Error Corrections, with prospective application beginning in the period of change.

These changes, along with attribution changes in the Bank's loan portfolio as of the valuation date, resulted in a $37,000 increase in the ACL for loans and a $9,000 increase in the reserve for unfunded commitments at March 31, 2025 when compared to December 31, 2024.

Corporate Structure

Effective July 18, 2025, Lake Shore Bancorp, Inc. (“Lake Shore Bancorp”) incorporated under the laws of the State of Maryland became the banking holding company of Lake Shore Bank, a New York commercial bank and its only wholly-owned subsidiary.

On January 27, 2025, Lake Shore, MHC, the former parent mutual holding company of Lake Shore Bancorp, Inc., a federal corporation ("Lake Shore Federal Bancorp"), adopted a Plan of Conversion and Reorganization (the "Plan") pursuant to which Lake Shore, MHC, would undertake a "second-step" conversion and Lake Shore Savings Bank, a federally chartered savings bank, the wholly-owned subsidiary of Lake Shore Bancorp Federal, would reorganize from the two-tier mutual holding company structure to the fully-public stock holding company structure.

Pursuant to the Plan, (i) Lake Shore Savings Bank became the wholly-owned subsidiary of Lake Shore Bancorp, converted its charter to a New York chartered commercial bank, and was renamed as Lake Shore Bank, (ii) the shares of common stock of Lake Shore Federal Bancorp owned by persons other than Lake Shore, MHC (the shares owned by Lake Shore, MHC were canceled) were converted into shares of common stock of Lake Shore Bancorp based on an exchange ratio designed to preserve the percentage ownership interests of such persons (excluding shares of common stock of Lake Shore Bancorp purchased in the stock offering described below and cash received in lieu of issuance of fractional shares of common stock of Lake Shore Bancorp, and as adjusted to reflect certain assets held by Lake Shore, MHC), and (iii) Lake Shore Bancorp offered and sold shares of common stock, representing the ownership interest of Lake Shore, MHC in Lake Shore Federal Bancorp, in a subscription offering. The number and price of shares of Lake Shore Bancorp common stock sold in the offering and the exchange ratio were based on Lake Shore Bancorp's pro forma market value on a fully converted basis, as determined by an independent appraisal.

The Plan was subject to regulatory approval as well as approval by the depositors of Lake Shore Savings Bank and by Lake Shore Federal Bancorp stockholders (including approval by the holders of a majority of the outstanding shares of Lake Shore Federal Bancorp's common stock held by persons other than the MHC). The Plan received all required regulatory, depositor and stockholder approval, and the conversion and offering were consummated on July 18, 2025.

The conversion was consummated through the merger of Lake Shore, MHC with and into Lake Shore Federal Bancorp, followed by the merger of Lake Shore Federal Bancorp with and into Lake Shore Bancorp, which occurred on July 18, 2025. In the subscription offering, Lake Shore Bancorp raised gross proceeds of $49.5 million by selling 4,950,460 shares of its common stock (approximately the midpoint of the offering range) at $10.00 per share to depositors of the Bank.

As part of the conversion transaction, each outstanding share of Lake Shore Federal Bancorp common stock owned by the public stockholders of Lake Shore Federal Bancorp (stockholders other than Lake Shore, MHC) as of the closing date were converted into shares of Lake Shore Bancorp's common stock based on an exchange ratio of 1.3549 shares of Lake Shore Bancorp's common stock for each share of Lake Shore Federal Bancorp common stock so that Lake Shore Federal Bancorp's existing public stockholders would own approximately the same percentage of Lake Shore Bancorp's common stock as they owned of Lake Shore Federal Bancorp's common stock immediately prior to the conversion. A total of 7,825,501 shares of common stock were outstanding following the completion of the stock offering. Earnings per share and other share information disclosed herein do not reflect the effect of Lake Shore Bancorp's conversion and related stock offering.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of June 30, 2025 for items that should potentially be recognized or disclosed in the unaudited consolidated financial statements. The evaluation was conducted through the date these unaudited consolidated financial statements were issued.

As previously disclosed on a Current Report on Form 8-K, the Board of Directors of the Company declared a cash dividend of $0.09 per share on its outstanding common stock. The dividend is expected to be paid on August 13, 2025 to stockholders of record as of August 4, 2025.

Note 2 – New Accounting Standards

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” The amendments in this ASU require an entity to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater than five percent of the amount computed by multiplying pretax income by the entity’s applicable statutory rate, on an annual basis. Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis; however, retrospective application is permitted. The Company does not expect the adoption of ASU 2023-09 to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)." The amendments in this ASU require a public business entity to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including employee compensation, depreciation, intangible asset amortization, and other costs and expenses. Additionally, a public business entity must disclose a qualitative description of the amounts remaining in relevant expense captions which are not separately disaggregated quantitatively under the amendments included within this ASU. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption of this ASU is permitted and may be applied prospectively to financial statements issued for reporting periods after the effective date of the ASU or retrospectively to any period presented in the financial statements.

Note 3 – Investment Securities

The amortized cost and fair value of securities are as follows:


	June 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
SECURITIES
Debt Securities Available for Sale
U.S. government agencies	$	2,005	$	—	$	(83	)		1,922
Municipal bonds		40,692		—		(8,956	)		31,736
Mortgage-backed securities:
Collateralized mortgage obligations-private label		8		—		—			8
Collateralized mortgage obligations-government sponsored entities		9,413		—		(1,055	)		8,358
Government National Mortgage Association		50		—		(3	)		47
Federal National Mortgage Association		10,298		1		(1,417	)		8,882
Federal Home Loan Mortgage Corporation		4,993		1		(836	)		4,158
Asset-backed securities-private label		—		27		—			27
Asset-backed securities-government sponsored entities		1		—		—			1
Total Debt Securities Available for Sale		67,460		29		(12,350	)		55,139
Equity Securities		22		162		—			184
Total Securities	$	67,482	$	191	$	(12,350	)	$	55,323


	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in thousands)
SECURITIES
Debt Securities Available for Sale
U.S. government agencies	$	2,006	$	—	$	(155	)	$	1,851
Municipal bonds		40,719		—		(8,431	)		32,288
Mortgage-backed securities:
Collateralized mortgage obligations-private label		9		—		—			9
Collateralized mortgage obligations-government sponsored entities		10,201		—		(1,259	)		8,942
Government National Mortgage Association		54		—		(4	)		50
Federal National Mortgage Association		10,812		—		(1,799	)		9,013
Federal Home Loan Mortgage Corporation		5,229		—		(989	)		4,240
Asset-backed securities-private label		—		28		—			28
Asset-backed securities-government sponsored entities		1		—		—			1
Total Debt Securities Available for Sale		69,031		28		(12,637	)		56,422
Equity Securities		22		51		—			73
Total Securities	$	69,053	$	79	$	(12,637	)	$	56,495

Debt Securities

All of the Company's collateralized mortgage obligations are backed by one- to four-family residential mortgages.

At June 30, 2025 and December 31, 2024, fourteen municipal bonds with an amortized cost of $3.8 million and fair value of $2.8 million and eighteen municipal bonds with an amortized cost of $6.2 million and fair value of $4.6 million, respectively, were pledged as collateral for customer deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. At June 30, 2025 and December 31, 2024, no securities were pledged as collateral to the Federal Reserve Bank ("FRB"), to the Federal Home Loan Bank of New York ("FHLBNY"), or for any other purposes.

The following table sets forth the Company’s investment in available for sale debt securities with gross unrealized losses of less than twelve months and gross unrealized losses of twelve months or more and associated fair values for which an allowance for credit losses has not been recorded for the periods indicated:


	Less than 12 months					12 months or more					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
	(Dollars in thousands)
June 30, 2025
U.S. government agencies	$	—	$	—		$	1,922	$	(83	)	$	1,922	$	(83	)
Municipal bonds		360		(20	)	$	31,376		(8,936	)		31,736		(8,956	)
Mortgage-backed securities		—		—		$	21,372		(3,311	)		21,372		(3,311	)
	$	360	$	(20	)	$	54,670	$	(12,330	)	$	55,030	$	(12,350	)


December 31, 2024
U.S. government agencies	$	—	$	—		$	1,851	$	(155	)	$	1,851	$	(155	)
Municipal bonds		371		(9	)		31,917		(8,422	)		32,288		(8,431	)
Mortgage-backed securities		86		(1	)		22,168		(4,050	)		22,254		(4,051	)
	$	457	$	(10	)	$	55,936	$	(12,627	)	$	56,393	$	(12,637	)

As of June 30, 2025, the Company's investment portfolio included two debt securities in the "unrealized losses less than twelve months" category and 168 debt securities in the "unrealized losses twelve months or more" category. As of December 31, 2024, the Company's investment portfolio included seven debt securities in the "unrealized losses less than twelve months" category and 169 debt securities in the "unrealized losses twelve months or more" category.

As of June 30, 2025, the Company had 170

Lake Shore Bancorp, Inc. /MD/ 10-Q