[10-Q] Lake Shore Bancorp, Inc. /MD/ Quarterly Earnings Report

Rhea-AI Filing Summary

Lake Shore Bancorp, Inc. (LSBK) reported stronger Q3 2025 results and completed its second‑step conversion. Net income for the quarter rose to $2,359 thousand from $1,332 thousand, as net interest income improved to $6,355 thousand and the company recorded a credit to the provision for credit losses. Basic and diluted EPS were $0.32, and a $0.09 per‑share dividend was declared.

Total assets reached $742,802 thousand, driven by higher cash and interest‑earning deposits. Deposits were $590,345 thousand, while long‑term debt declined to $2,000 thousand. Stockholders’ equity increased to $139,306 thousand, reflecting the July 18, 2025 second‑step conversion and stock offering.

Through the conversion, the company sold 4,950,460 shares at $10.00 per share, raising gross proceeds of $49.5 million, with approximately $2.3 million in offering costs and a $4.0 million ESOP purchase. There were 7,825,501 shares outstanding as of November 6, 2025. The board also authorized a plan to repurchase up to 5% of outstanding shares, which may begin after July 20, 2026.

Insights

Banking & Capital Structure Analyst

Q3 earnings improved; conversion bolstered capital and lowered debt.

Lake Shore Bancorp reported higher quarterly profitability, with net income of $2,359 thousand and net interest income of $6,355 thousand. Lower interest expense and a credit to the provision supported results, while non‑interest income rose modestly.

Balance sheet metrics strengthened: total assets were $742,802 thousand, deposits $590,345 thousand, and long‑term debt decreased to $2,000 thousand. Equity increased to $139,306 thousand, primarily from the second‑step conversion and stock offering.

The conversion raised gross proceeds of $49.5 million on July 18, 2025, partially offset by $2.3 million in offering costs and a $4.0 million ESOP purchase. A dividend of $0.09 per share was declared on October 22, 2025. The board also adopted a plan to repurchase up to 5% of shares, potentially commencing after July 20, 2026.

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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 September 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 November 6, 2025.

TABLE OF CONTENTS

ITEM		PART I	PAGE
1	FINANCIAL STATEMENTS
	-	Consolidated Statements of Financial Condition as of September 30, 2025 (Unaudited) and December 31, 2024	1
	-	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	3
	-	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	4
	-	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	5
	-	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	7
	-	Notes to Unaudited Consolidated Financial Statements	8
2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		34
3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		48
4	CONTROLS AND PROCEDURES		48
		PART II
1A	RISK FACTORS		49
2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		49
5	OTHER INFORMATION
6	EXHIBITS		50
SIGNATURES			50

PART I Financial Information

Item 1. Financial Statements

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Financial Condition

		September 30,			December 31,
		2025			2024
		(Dollars in thousands, except share and per share data)
		(Unaudited)
Assets
Cash and due from banks		$	3,296			$	2,710
Interest earning deposits			80,342				30,421
Cash and Cash Equivalents			83,638				33,131
Securities, at fair value			56,049				56,495
Federal Home Loan Bank stock, at cost			763				1,157
Loans receivable, net of allowance for credit losses of $4,869 in 2025 and $5,133 in 2024			552,611				544,620
Premises and equipment, net			7,217				7,218
Accrued interest receivable			3,003				2,819
Bank-owned life insurance			29,287				29,340
Other assets			10,234				10,724
Total Assets		$	742,802			$	685,504
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Interest bearing		$	501,293			$	476,566
Non-interest bearing			89,052				96,412
Total Deposits			590,345				572,978
Long-term debt			2,000				10,250
Advances from borrowers for taxes and insurance			1,439				3,225
Other liabilities and accrued interest payable			9,712				9,183
Total Liabilities			603,496				595,636
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized at September 30, 2025; no shares issued or outstanding at September 30, 2025 or December 31, 2024			—				—
Common stock, $0.01 par value per share, 40,000,000 shares authorized at September 30, 2025 and 25,000,000 shares authorized at December 31, 2024; 7,825,501 shares issued and 7,825,501 shares outstanding at September 30, 2025 and 9,262,793 shares issued and 7,770,658 shares outstanding at December 31, 2024			78				68
Additional paid-in capital			65,878				31,512
Treasury stock, at cost (No shares at September 30, 2025 and 1,492,135 shares at December 31, 2024)			—				(13,304	)
Unearned shares held by ESOP			(4,784	)			(938	)
Unearned shares held by compensation plans			(395	)			(311	)
Retained earnings			87,121				82,805
Accumulated other comprehensive loss			(8,592	)			(9,964	)
Total Stockholders' Equity			139,306				89,868
Total Liabilities and Stockholders' Equity		$	742,802			$	685,504

1

Share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549) (see Note 1)

See notes to unaudited consolidated financial statements.

2

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Income (Unaudited)

		Three Months Ended September 30,										Nine Months Ended September 30,
		2025						2024				2025					2024
		(Dollars in thousands, except per share data)
		(Unaudited)
Interest Income
Loans, including fees			$	8,193				$	7,730				$	24,415			$	23,010
Investment securities, taxable				166					188					481				593
Investment securities, tax-exempt				199					217					632				650
Interest-earning deposits				793					716					1,297				1,962
Total Interest Income				9,351					8,851					26,825				26,215
Interest Expense
Deposits				2,966					3,319					8,756				9,934
Long-term debt				18					139					96				525
Finance Lease and Other				12					10					31				33
Total Interest Expense				2,996					3,468					8,883				10,492
Net Interest Income				6,355					5,383					17,942				15,723
Credit to Provision for Credit Losses				(269	)				(229	)				(221	)			(866	)
Net Interest Income After Credit to Provision for Credit Losses				6,624					5,612					18,163				16,589
Non-Interest Income
Service charges and fees				276					284					786				835
Debit card fees				198					212					586				617
Earnings on bank-owned life insurance				469					287					907				722
Unrealized gain (loss) on equity securities				79					(4	)				190				8
Recovery on previously impaired investment securities				1					1					4				4
Earnings on annuity assets				24					—					69				—
Other				18					11					48				50
Total Non-Interest Income				1,065					791					2,590				2,236
Non-Interest Expense
Salaries and employee benefits				2,855					2,742					8,624				8,155
Occupancy and equipment				630					680					1,921				2,064
Data processing				514					436					1,429				1,335
Professional services				303					361					868				1,085
Telephone and communications				76					104					247				310
FDIC insurance				78					130					224				693
Postage and supplies				94					62					231				202
Advertising				18					11					44				79
Other				275					287					758				783
Total Non-Interest Expense				4,843					4,813					14,346				14,706
Income before Income Taxes				2,846					1,590					6,407				4,119
Income Tax Expense				487					258					1,072				657
Net Income			$	2,359				$	1,332				$	5,335			$	3,462
Basic and diluted earnings per common share			$	0.32				$	0.18				$	0.70			$	0.46
Dividends declared per share			$	0.09				$	0.13				$	0.22			$	0.27

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549) (see Note 1)

See notes to unaudited consolidated financial statements.

3

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)

		Three Months Ended September 30,
		2025				2024
		(Dollars in thousands)
		(Unaudited)
Net Income		$	2,359			$	1,332
Other Comprehensive Income, net of tax expense:
Unrealized holding gains on securities available for sale, net of tax expense			1,147				1,866
Reclassification adjustments related to:
Recovery on previously impaired investment securities included in net income, net of    tax expense			(1	)			(1	)
Total Other Comprehensive Income			1,146				1,865
Total Comprehensive Income		$	3,505			$	3,197
		Nine Months Ended September 30,
		2025				2024
		(Dollars in thousands)
		(Unaudited)
Net Income		$	5,335			$	3,462
Other Comprehensive Income, net of tax expense:
Unrealized holding gains on securities available for sale, net of tax expense			1,375				649
Reclassification adjustments related to:
Recovery on previously impaired investment securities included in net income, net of tax expense			(3	)			(3	)
Total Other Comprehensive Income			1,372				646
Total Comprehensive Income		$	6,707			$	4,108

See notes to unaudited consolidated financial statements.

4

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity

Three and Nine Months Ended September 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 (2,688 shares)			—				10				—				21				—				—				—				31
Compensation plan shares granted (36,849 shares)			—				—				256				—				(256	)			—				—				—
Compensation plan shares earned (10,586 shares)			—				15				—				—				74				—				—				89
Cash dividends declared ($0.13 per share)			—				—				—				—				—				(361	)			—				(361	)
Common stock repurchased on vesting for payroll taxes (2,914 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 (2,688 shares)			—				9				—				21				—				—				—				30
Compensation plan shares earned (7,900 shares)			—				22				—				—				54				—				—				76
Common stock repurchased on vesting for payroll taxes (1,490 shares)			—				—				(16	)			—				—				—				—				(16	)
Balance - June 30, 2025			68				31,568				(13,099	)			(896	)			(439	)			85,420				(9,738	)			92,884
Net income			—				—				—				—				—				2,359				—				2,359
Other comprehensive income, net of tax expense of $305			—				—				—				—				—				—				1,146				1,146
ESOP shares earned (7,598 shares)			—				23				—				72				—				—				—				95
Compensation plan shares earned (6,284 shares)			—				22				—				—				44				—				—				66
Cash dividends declared ($0.09 per share)			—				—				—				—				—				(658	)			—				(658	)
Second-step conversion and stock offering:																															—
Lake Shore, MHC shares sold in public offering, net of offering costs of $2,307			10				34,089				—				—				—				—				—				34,099
Purchase by ESOP			—				—				—				(3,960	)			—				—				—				(3,960	)
Treasury stock retired			—				—				13,099				—				—				—				—				13,099
Contribution from Lake Shore, MHC			—				176				—				—				—				—				—				176
Balance - September 30, 2025		$	78			$	65,878			$	—			$	(4,784	)		$	(395	)		$	87,121			$	(8,592	)		$	139,306

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549) (see Note 1)

See notes to unaudited consolidated financial statements.

5

														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 (2,688 shares)			—				2				—				21				—				—				—				23
Compensation plan shares earned, net of forfeitures (1,471 shares)			—				5				—				—				10				—				—				15
Common stock repurchased on vesting for payroll taxes (2,038 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 (2,688 shares)			—				2				—				21				—				—				—				23
Compensation plan shares granted (70,796 shares)			—				—				559				—				(559	)			—				—				—
Compensation plan shares earned, net of forfeitures (7,750 shares)			—				11				—				—				54				—				—				65
Cash dividends declared ($0.13 per share)			—				—				—				—				—				(361	)			—				(361	)
Balance - June 30, 2024			68				31,476				(13,218	)			(981	)			(534	)			80,725				(10,604	)			86,932
Net income			—				—				—				—				—				1,332				—				1,332
Other comprehensive income, net of tax expense of $496			—				—				—				—				—				—				1,865				1,865
ESOP shares earned (2,688 shares)			—				5				—				22				—				—				—				27
Compensation plan shares earned, net of forfeitures (10,240 shares)			—				12				—				—				70				—				—				82
Cash dividends declared ($0.13 per share)			—				—				—				—				—				(361	)			—				(361	)
Balance - September 30, 2024		$	68			$	31,493			$	(13,218	)		$	(959	)		$	(464	)		$	81,696			$	(8,739	)		$	89,877

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549) (see Note 1)

See notes to unaudited consolidated financial statements.

6

Lake Shore Bancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

		Nine Months Ended September 30,
		2025				2024
		(Unaudited)
		(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	5,335			$	3,462
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net amortization of investment securities			52				54
Net amortization of deferred loan costs			275				369
Credit to provision for credit losses			(221	)			(866	)
Recovery on previously impaired investment securities			(4	)			(4	)
Unrealized gain on equity securities			(190	)			(8	)
Loss on disposal of premises and equipment			2				—
Depreciation and amortization of premises and equipment			462				566
Earnings on bank-owned life insurance			(907	)			(722	)
Deferred income tax (benefit) expense			(154	)			103
ESOP shares committed to be released			156				73
Stock based compensation expense			231				162
(Increase) in accrued interest receivable			(184	)			(54	)
Decrease (increase) in other assets			319				(2,989	)
Loss on sale of foreclosed real estate			—				19
Increase (decrease) in other liabilities			746				(1,040	)
Increase in annuity asset			(69	)			—
Net Cash Provided by (Used in) Operating Activities			5,849				(875	)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in debt securities:
Maturities, prepayments and calls			2,324				2,435
Redemptions of Federal Home Loan Bank of New York Stock			394				1,136
Loan principal collections and originations, net			(8,073	)			17,320
Proceeds from claims on and surrender of bank-owned life insurance			1,163				7,023
Proceeds from sale of foreclosed real estate			—				42
Additions to premises and equipment			(577	)			(6	)
Net Cash (Used in) Provided by Investing Activities			(4,769	)			27,950
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the sale of common stock, net of offering costs and ESOP purchase			43,241				—
Net increase (decrease) in deposits			17,367				(3,361	)
Net (decrease) in advances from borrowers for taxes and insurance			(1,786	)			(1,655	)
Repayment of long-term debt			(8,250	)			(25,000	)
Repayment of finance lease obligation			(75	)			(69	)
Shares of common stock repurchased on vesting for payroll taxes			(51	)			(17	)
Cash dividends paid			(1,019	)			(722	)
Net Cash Provided by (Used in) Financing Activities			49,427				(7,133	)
Net Increase in Cash and Cash Equivalents			50,507				19,942
CASH AND CASH EQUIVALENTS - BEGINNING			33,131				53,730
CASH AND CASH EQUIVALENTS - ENDING		$	83,638			$	73,672
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid		$	8,940			$	11,249
Income taxes paid		$	1,288			$	828
SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized gain on securities available for sale		$	1,740			$	822

See notes to unaudited consolidated financial statements.

7

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. (the “Company”, "Lake Shore Bancorp," “us”, “our”, or “we”), and Lake Shore 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 underwent a Second Step Conversion, as more fully described below.

The interim unaudited consolidated financial statements included herein as of September 30, 2025 and for the three and nine months ended September 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 nine months ended September 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.

8

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

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 pursuant to which Lake Shore, MHC, would undertake a "second-step" conversion (the “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. In addition, Lake Shore Savings Bank would convert its charter from a federal savings bank to a New York commercial bank renamed Lake Shore Bank.

Effective July 18, 2025, Lake Shore Bancorp, Inc., a new corporation incorporated under the laws of the State of Maryland, became the bank holding company of Lake Shore Bank, a New York commercial bank and its only wholly-owned subsidiary in connection with the completion of Conversion. 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. The Company used $4.0 million of the proceeds to fund an addition to its Employee Stock Ownership Plan ("ESOP") loan for the acquisition of an additional 396,036 shares at $10.00 per share. Expenses incurred related to the offering were approximately $2.3 million and have been recorded against offering proceeds.

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 July 18, 2025 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.

9

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of September 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, on October 22, 2025, 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 November 12, 2025 to stockholders of record as of November 3, 2025.

As previously disclosed on a Current Report on Form 8-K, on October 22, 2025, the Board of Directors of the Company adopted a plan to repurchase up to 5% of its outstanding shares of common stock, which may commence following the one-year anniversary of the Conversion, or on July 20, 2026.

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:

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		September 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			$	—			$	(74	)			1,931
Municipal bonds			40,679				—				(7,771	)			32,908
Mortgage-backed securities:
Collateralized mortgage obligations-private label			8				—				—				8
Collateralized mortgage obligations-government    sponsored entities			9,022				—				(949	)			8,073
Government National Mortgage Association			48				—				(2	)			46
Federal National Mortgage Association			10,031				1				(1,330	)			8,702
Federal Home Loan Mortgage Corporation			4,862				1				(773	)			4,090
Asset-backed securities-private label			—				27				—				27
Asset-backed securities-government sponsored entities			1				—				—				1
Total Debt Securities Available for Sale			66,656				29				(10,899	)			55,786
Equity Securities			22				241				—				263
Total Securities		$	66,678			$	270			$	(10,899	)		$	56,049

		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 September 30, 2025 and December 31, 2024, fifteen municipal bonds with an amortized cost of $4.5 million and fair value of $3.5 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 September 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.

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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)
September 30, 2025
U.S. government agencies		$	—			$	—			$	1,931			$	(74	)		$	1,931			$	(74	)
Municipal bonds			378				(2	)		$	32,120				(7,769	)			32,498				(7,771	)
Mortgage-backed securities			—				—			$	20,840				(3,054	)			20,840				(3,054	)
		$	378			$	(2	)		$	54,891			$	(10,897	)		$	55,269			$	(10,899	)

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 September 30, 2025, the Company's investment portfolio included two debt securities in the "unrealized losses less than twelve months" category and 166 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 September 30, 2025, the Company had 168 debt securities with a fair value of $55.3 million in an unrealized loss position. As of December 31, 2024, the Company had 176 debt securities with a fair value of $56.4 million in an unrealized loss position. The Company reviews securities in an unrealized loss position to evaluate credit risk. The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk. No credit risk was found and no allowance for credit losses on securities available for sale was recorded as of September 30, 2025 or December 31, 2024. The unrealized losses are attributed to noncredit-related factors including changes in interest rates and other market conditions. The Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of the investments. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Accrued interest of $313,000 as of September 30, 2025 and $254,000 as of December 31, 2024 on available-for-sale debt securities is included in accrued interest receivable on the consolidated statements of financial condition and is excluded from the estimate of credit losses.

During the three and nine months ended September 30, 2025 and 2024, the Company did not sell any debt securities.

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Scheduled contractual maturities of debt securities are as follows:

		Amortized				Fair
		Cost				Value
		(Dollars in thousands)
September 30, 2025:
Less than one year		$	636			$	628
After one year through five years			3,430				3,304
After five years through ten years			11,556				10,343
After ten years			27,062				20,564
Mortgage-backed securities			23,971				20,919
Asset-backed securities			1				28
Total Debt Securities		$	66,656			$	55,786

The Company's mortgage-backed securities and asset-backed securities have stated maturities that may differ from actual maturities due to the borrowers' ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying assets and are generally influenced by interest rates. In the table above, mortgage-backed securities and asset-backed securities are shown in the aggregate.

Equity Securities

At September 30, 2025 and December 31, 2024, equity securities consisted of 22,368 shares of Federal Home Loan Mortgage Corporation (“FHLMC”) common stock. During the three months ended September 30, 2025 and 2024, the Company recognized an unrealized gain of $79,000 and an unrealized loss of $4,000, respectively, on the equity securities, which was recorded in non-interest income in the consolidated statements of income. During the nine months ended September 30, 2025 and 2024, the Company recognized an unrealized gain of $190,000 and $8,000, respectively, on the equity securities, which was recorded in non-interest income in the consolidated statements of income. There were no purchases or sales of equity securities during the three and nine months ended September 30, 2025 and 2024.

Note 4 - Loans and Allowance for Credit Losses

Loans consisted of the following segments as of September 30, 2025 and December 31, 2024:

		September 30,					December 31,
		2025					2024
		(Dollars in thousands)
Real Estate Loans:
Residential, one- to four-family (1)	$		152,011			$		161,331
Home Equity			47,330					47,456
Commercial (2)			324,449					320,984
Total real estate loans			523,790					529,771
Other Loans:
Commercial			18,068					15,728
Consumer			12,539					991
Total gross loans			554,397					546,490
Net deferred loan costs			3,083					3,263
Allowance for credit losses on loans			(4,869	)				(5,133	)
Loans receivable, net	$		552,611			$		544,620

(1)There were no one- to four-family construction loans at September 30, 2025 or December 31, 2024.

(2)Includes commercial construction loans of $16.5 million and $18.9 million at September 30, 2025 and December 31, 2024, respectively.

Real estate loans of approximately $119.0 million and $39.4 million in unpaid principal balance were pledged as collateral for FHLBNY advances as of September 30, 2025 and December 31, 2024, respectively.

Total loans are stated at the principal amounts outstanding, net of unamortized loan fees and costs, with interest income accrued based upon the outstanding principal balance and the terms of the loans. Loan origination fees, net of certain direct

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origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Loans are reported by the portfolio segments identified above and are analyzed by management on this basis. All loan policies identified below apply to all segments of the loan portfolio.

Accrued interest on loans of $2.6 million and $2.5 million at September 30, 2025 and December 31, 2024, respectively, is included in accrued interest receivable on the consolidated statements of financial condition and is excluded from the estimate of credit losses.

Allowance for Credit Losses for Loans

The loan portfolio is segmented into the following loan types by risk level:

Real Estate Loans:

One- to Four-Family – are loans secured by first lien collateral on residential real estate primarily held in the Western New York region. These loans can be affected by economic conditions and the value of underlying properties. Western New York’s housing market has consistently demonstrated stability in home prices despite changing economic conditions. Furthermore, the Company has conservative underwriting standards and its residential lending policies and procedures verify that its one- to four-family residential mortgage loans generally conform to secondary market guidelines.

Home Equity - are loans or lines of credit secured by first or second liens on owner-occupied residential real estate primarily held in the Western New York region. These loans can also be affected by economic conditions and the values of underlying properties. Home equity loans may have increased risk of loss if the Company does not hold the first mortgage resulting in the Company being in a secondary position in the event of collateral liquidation. The Company does not originate interest only home equity loans.

Commercial Real Estate – are loans used to finance the purchase of real property, which generally consists of developed real estate that is held as first lien collateral for the loan. These loans are secured by real estate properties that are primarily held in the Western New York region. Commercial real estate lending involves additional risks compared with one- to four-family residential lending, because payments on loans secured by commercial real estate properties are often dependent on the successful operation or management of the properties, and/or the collateral value of the commercial real estate securing the loan, and repayment of such loans may be subject to adverse conditions in the real estate market or economic conditions to a greater extent than one- to four-family residential mortgage loans. Also, commercial real estate loans typically involve relatively large loan balances concentrated with single borrowers or groups of related borrowers.

Other Loans:

Commercial – includes business installment loans, lines of credit, and other commercial loans. Most of our commercial loans are for terms generally not in excess of 5 years. Whenever possible, we collateralize these loans with a lien on business assets and equipment and require the personal guarantees from principals of the borrower. Commercial loans generally involve a higher degree of credit risk, as commercial loans can involve relatively large loan balances to a single borrower or groups of related borrowers, with the repayment of such loans typically dependent on the successful operation of the commercial business and the income stream of the borrower. Such risks can be significantly affected by economic conditions. Although commercial loans may be collateralized by equipment or other business assets, the liquidation of collateral in the event of a borrower default may be an insufficient source of repayment because the equipment or other business assets may be obsolete or of limited use, among other things. Accordingly, the repayment of a commercial loan depends primarily on the credit worthiness of the borrowers (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment.

Consumer – consist of loans secured by collateral such as an automobile or a deposit account, unsecured loans, and lines of credit. Consumer loans tend to have a higher credit risk due to the loans being either unsecured or secured by rapidly depreciable assets. Furthermore, consumer loan payments are dependent on the borrower’s continuing financial stability and therefore are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy.

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Included in the Real Estate Loans for one-to four-family and commercial real estate are loans to finance the construction of either one- to four-family owner occupied homes or commercial real estate. At the end of the construction period, the loan automatically converts to either a one- to four-family residential mortgage or a commercial real estate mortgage, as applicable. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion compared to the actual cost of construction. The Company limits its risk during construction as disbursements are not made until the required work for each advance has been completed and an updated lien search is performed. The completion of the construction progress is verified by a Company loan officer or inspections performed by an independent appraisal firm or other third party. Construction loans also expose us to the risk of construction delays which may impair the borrower’s ability to repay the loan.

The following tables detail the changes in the allowance for credit losses by loan segment as well as the distribution of the allowance for credit losses and gross loans receivable by loan segment and impairment method at or for the three and nine months ended September 30, 2025 and 2024.

		Real Estate Loans															Other Loans
		One- to Four-Family(1)					Home Equity					Commercial Real Estate (2)					Commercial					Consumer					Total
		(Dollars in thousands)
September 30, 2025
Allowance for Credit Loss on Loans
Balance – July 1, 2025		$		734			$		106			$		4,167			$		147			$		10			$		5,164
Charge-offs				—					—					—					—					(8	)				(8	)
Recoveries				—					—					—					—					1					1
(Credit) provision				(25	)				(3	)				(262	)				(2	)				4					(288	)
Balance – September 30, 2025		$		709			$		103			$		3,905			$		145			$		7			$		4,869
Balance - January 1, 2025		$		390			$		137			$		4,171			$		421			$		14			$		5,133
Charge-offs				—					—					—					—					(21	)				(21	)
Recoveries				4					—					—					—					2					6
Provision (credit)				315					(34	)				(266	)				(276	)				12					(249	)
Balance – September 30, 2025		$		709			$		103			$		3,905			$		145			$		7			$		4,869
Ending balance: individually evaluated		$		—			$		—			$		—			$		—			$		—			$		—
Ending balance: collectively evaluated		$		709			$		103			$		3,905			$		145			$		7			$		4,869
Gross Loans Receivable(3):
Ending balance		$		152,011			$		47,330			$		324,449			$		18,068			$		12,539			$		554,397
Ending balance: individually evaluated		$		1,600			$		104			$		93			$		—			$		—			$		1,797
Ending balance: collectively evaluated		$		150,411			$		47,226			$		324,356			$		18,068			$		12,539			$		552,600

(1)There were no one-to four-family construction loans at September 30, 2025.

(2)Includes commercial construction loans of $16.5 million.

(3)Gross Loans Receivable does not include allowance for credit losses of $(4,869) or net deferred loan costs of $3,083.

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		Real Estate Loans															Other Loans
		One- to Four-Family(1)					Home Equity					Commercial Real Estate (2)					Commercial					Consumer					Total
		(Dollars in thousands)
September 30, 2024
Allowance for Credit Loss on Loans
Balance- July 1, 2024		$		473			$		216			$		4,689			$		523			$		15			$		5,916
Charge-offs				—					—					—					—					(16	)				(16	)
Recoveries				3					—					—					—					2					5
(Credit) provision				(35	)				(32	)				(247	)				(111	)				14					(411	)
Balance – September 30, 2024		$		441			$		184			$		4,442			$		412			$		15			$		5,494
Balance- January 1, 2024		$		532			$		213			$		5,231			$		471			$		16			$		6,463
Charge-offs				—					—					—					—					(29	)				(29	)
Recoveries				8					—					—					—					7					15
(Credit) provision				(99	)				(29	)				(789	)				(59	)				21					(955	)
Balance – September 30, 2024		$		441			$		184			$		4,442			$		412			$		15			$		5,494
Ending balance: individually    evaluated		$		—			$		—			$		—			$		—			$		—			$		—
Ending balance: collectively    evaluated		$		441			$		184			$		4,442			$		412			$		15			$		5,494
Gross Loans Receivable(3):
Ending balance		$		163,835			$		47,969			$		312,575			$		15,645			$		1,024			$		541,048
Ending balance: individually    evaluated		$		134			$		—			$		1,242			$		—			$		—			$		1,376
Ending balance: collectively    evaluated		$		163,701			$		47,969			$		311,333			$		15,645			$		1,024			$		539,672

(1)There were no one-to four-family construction loans at September 30, 2024.

(2)Includes commercial construction loans of $15.1 million.

(3)Gross Loans Receivable does not include allowance for credit losses of $(5,494) or net deferred loan costs of $3,451.

The following table summarizes the distribution of the allowance for credit losses and loans receivable by loan segment and impairment method as of December 31, 2024:

		Real Estate Loans												Other Loans
		One- to Four-Family(1)				Home Equity				Commercial Real Estate (2)				Commercial				Consumer				Total
		(Dollars in thousands)
December 31, 2024
Allowance for Credit Losses on Loans
Balance – December 31, 2024		$	390			$	137			$	4,171			$	421			$	14			$	5,133
Ending balance: individually    evaluated		$	—			$	—			$	—			$	—			$	—			$	—
Ending balance: collectively    evaluated		$	390			$	137			$	4,171			$	421			$	14			$	5,133
Gross Loans Receivable(3):
Ending Balance		$	161,331			$	47,456			$	320,984			$	15,728			$	991			$	546,490
Ending balance: individually    evaluated		$	131			$	—			$	1,242			$	—			$	—			$	1,373
Ending balance: collectively    evaluated		$	161,200			$	47,456			$	319,742			$	15,728			$	991			$	545,117

(1)There were no one- to four-family construction loans at December 31, 2024.

(2)Includes commercial construction loans of $18.9 million.

(3)Gross Loans Receivable does not include allowance for credit losses of $(5,133) or deferred loan costs of $3,263.

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Allowance for Credit Losses on Unfunded Loan Commitments

The Company’s allowance for credit losses on unfunded loan commitments is recognized as a liability and included within other liabilities on the unaudited consolidated statements of financial condition, with adjustments to the reserve recognized in (credit) provision for credit losses on the unaudited consolidated statements of income. The Company’s activity in the allowance for credit losses on unfunded loan commitments for the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024 was as follows:

	For the nine months ended September 30, 2025
	(Dollars in thousands)
Balance at December 31, 2024	$		314
Provision for credit losses			9
Balance at March 31, 2025			323
Provision for credit losses			—
Balance at June 30, 2025			323
Provision for credit losses			19
Balance at September 30, 2025	$		342
	For the nine months ended September 30, 2024
	(Dollars in thousands)
Balance at December 31, 2023	$		487
Credit to provision for credit losses			(129	)
Balance at March 31, 2024			358
Provision for credit losses			36
Balance at June 30, 2024			394
Provision for credit losses			182
Balance at September 30, 2024	$		576

Non-accrual Loans and Delinquency Status

The following table presents the amortized cost basis of loans on non-accrual status and loans on non-accrual status with no allowance for credit losses recorded. The Company did not have any loans past due 90 days or more and still accruing at September 30, 2025 and December 31, 2024.

	Total Non-accrual										Non-accrual with no Allowance for Credit Losses
		September 30,					December 31,					September 30,					December 31,
		2025					2024					2025					2024
	(Dollars in thousands)
Real Estate Loans:
Residential, one- to four-family	$		1,631			$		1,891			$		1,631			$		1,891
Home Equity			109					683					109					683
Commercial Real Estate (1)			93					1,226					93					1,226
Other Loans:
Commercial			—					—					—					—
Consumer			—					4					—					4
Total loans	$		1,833			$		3,804			$		1,833			$		3,804

(1)Includes commercial real estate construction loans.

There was no interest income recognized on non-accrual loans during the three and nine months ended September 30, 2025 and the three and nine months ended September 30, 2024. The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. A loan does not have to be 90 days delinquent in order to be classified as non-accrual. When interest accrual is discontinued, all unpaid accrued interest is reversed. If ultimate collection of principal is in doubt, all cash receipts on non-accrual loans are applied to reduce the principal balance.

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The following tables provide an analysis of past due loans as of the dates indicated:

		30-59 Days					60-89 Days					90 Days or More					Total Past						Current				Total Gross Loans
		Past Due					Past Due					Past Due					Due						Due				Receivable
		(Dollars in thousands)
September 30, 2025:
Real Estate Loans:
Residential, one- to four-family		$		1,080			$		64			$		594			$		1,738			$		150,273			$		152,011
Home equity				164					140					36					340					46,990					47,330
Commercial				—					—					93					93					324,356					324,449
Other Loans:
Commercial				—					—					—					—					18,068					18,068
Consumer				4					—					—					4					12,535					12,539
Total		$		1,248			$		204			$		723			$		2,175			$		552,222			$		554,397
		30-59 Days					60-89 Days					90 Days or More					Total Past						Current				Total Gross Loans
		Past Due					Past Due					Past Due					Due						Due				Receivable
		(Dollars in thousands)
December 31, 2024:
Real Estate Loans:
Residential, one- to four-family		$		1,035			$		454			$		662			$		2,151			$		159,180			$		161,331
Home equity				318					26					596					940					46,516					47,456
Commercial(1)				—					—					1,242					1,242					319,742					320,984
Other Loans:
Commercial				—					—					—					—					15,728					15,728
Consumer				3					2					—					5					986					991
Total		$		1,356			$		482			$		2,500			$		4,338			$		542,152			$		546,490

(1)Includes commercial real estate construction loans.

Collateral-Dependent Loans

Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is measured on an individual loan basis based on the difference between the fair value of the loan’s collateral, which is adjusted for liquidation costs, and the amortized cost. If

18

the fair value of the collateral exceeds the amortized cost, no allowance for credit losses is required. Refer to Note 8 - Fair Value of Financial Instruments for additional information.

The following table presents an analysis of the amortized cost of collateral-dependent loans of the Company as of September 30, 2025 and December 31, 2024 by collateral type and loan segment:

		Residential				Business								Commercial								Total
		Real Estate				Assets				Land				Real Estate				Other				Loans
September 30, 2025:	(Dollars in thousands)
Real Estate Loans:
Residential, one- to four-family	$		1,631		$		—		$		—		$		—		$		—		$		1,631
Home Equity			109				—				—				—				—				109
Commercial			—				—				—				93				—				93
Consumer			—				—				—				—				—				—
Total	$		1,740		$		—		$		—		$		93		$		—		$		1,833
December 31, 2024:
Real Estate Loans:
Residential, one- to four-family	$		143		$		—		$		—		$		—		$		—		$		143
Commercial			200				—				1,026				—				—				1,226
Total	$		343		$		—		$		1,026		$		—		$		—		$		1,369

There was no allowance for credit losses recorded on the above noted collateral-dependent loans as of September 30, 2025 and December 31, 2024.

Credit Quality Indicators

The Company’s policies provide for the classification of loans as follows:

•Pass/Performing;

•Special Mention – does not currently expose the Company to a sufficient degree of risk but does possess credit deficiencies or potential weaknesses deserving the Company’s close attention;

•Substandard – has one or more well-defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. A substandard asset would be one inadequately protected by the current net worth and paying capacity of the obligor or pledged collateral, if applicable;

•Doubtful – has all the weaknesses inherent in substandard loans with the additional characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss; and

•Loss – loan is considered uncollectible and continuance without the establishment of a specific valuation reserve is not warranted.

Each commercial loan is individually assigned a loan classification. The Company’s consumer loans, including residential one- to four-family loans and home equity loans, are classified by using the delinquency status as the basis for classifying these loans. Generally, all consumer loans more than 90 days past due are classified and placed into non-accrual status. Such loans that are considered by management to be well-secured and in the process of collection will remain in accrual status.

Asset quality indicators for all loans and the Company’s risk rating process are reviewed on a monthly basis. Risk ratings are updated as circumstances that could affect the repayment of individual loans are brought to management’s attention through an established monitoring process. Written action plans are maintained and reviewed on a quarterly basis for all classified commercial loans. In addition to the Company’s internal process, an outsourced independent credit review

19

function is in place for commercial and certain consumer loans to further assess assigned risk classifications and monitor compliance with internal lending policies and procedures.

The following table presents gross loans by credit quality indicator by origination year at September 30, 2025 as well as gross charge-offs by year of origination for the nine months ended September 30, 2025:

		2025				2024				2023				2022				2021				Prior				Revolving Loans				Total
September 30, 2025:		(Dollars in thousands)
Residential, one-to four-family(1):
Pass	$		1,905		$		5,105		$		10,500		$		30,972		$		25,484		$		75,815		$		—		$		149,781
Substandard			—				—				190				484				268				1,288				—				2,230
Doubtful			—				—				—				—				—				—				—				—
Total	$		1,905				5,105		$		10,690		$		31,456		$		25,752		$		77,103		$		—		$		152,011
Current period gross charge-offs	$		—				—		$		—		$		—		$		—		$		—		$		—		$		—
Home Equity(2):
Pass	$		568		$		88		$		2,183		$		1,788		$		62		$		381		$		41,825				46,895
Substandard			—				—				—				—				—				—				435				435
Doubtful			—				—				—				—				—				—				—				—
Total	$		568		$		88		$		2,183		$		1,788		$		62		$		381		$		42,260		$		47,330
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Commercial Real Estate(3):
Pass	$		21,171		$		35,850		$		18,436		$		82,347		$		39,038		$		118,296		$		2		$		315,140
Special mention			—				—				404				—				—				872				—				1,276
Substandard			—				—				—				—				—				8,033				—				8,033
Doubtful			—				—				—				—				—				—				—				—
Total	$		21,171		$		35,850		$		18,840		$		82,347		$		39,038		$		127,201		$		2		$		324,449
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Commercial Loans:
Pass	$		3,852		$		1,239		$		783		$		1,651		$		137		$		1,678		$		5,734		$		15,074
Special mention			—				—				—				—				89				—				—				89
Substandard			—				—				—				—				—				1,949				956				2,905
Doubtful			—				—				—				—				—				—				—				—
Total	$		3,852		$		1,239		$		783		$		1,651		$		226		$		3,627		$		6,690		$		18,068
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Consumer Loans:
Pass	$		11,876		$		160		$		63		$		60		$		1		$		175		$		203		$		12,538
Substandard			—				—				—				—				—				—				1				1
Doubtful			—				—				—				—				—				—				—				—
Total	$		11,876		$		160		$		63		$		60		$		1		$		175		$		204		$		12,539
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		21		$		21

(1)There were no one- to four-family construction loans at September 30, 2025.

(2)Home equity loans presented with an origination year represent home equity lines-of-credit which have been converted to term loans.

(3)Includes commercial construction loans.

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The following table presents gross loans by credit quality indicator by origination year at December 31, 2024 as well as gross charge-offs by year of origination for the year ended December 31, 2024:

		2024				2023				2022				2021				2020				Prior				Revolving Loans				Total
December 31, 2024:		(Dollars in thousands)
Residential, one-to four-family(1):
Pass	$		5,554		$		11,684		$		33,058		$		26,594		$		16,272		$		66,081		$		—		$		159,243
Substandard			—				—				447				265				—				1,377				—				2,088
Doubtful			—				—				—				—				—				—				—				—
Total	$		5,554				11,684		$		33,504		$		26,859		$		16,272		$		67,458		$		—		$		161,331
Current period gross charge-offs	$		—				—		$		—		$		—		$		—		$		—		$		—		$		—
Home Equity(2):
Pass	$		102		$		2,712		$		2,297		$		76		$		34		$		574		$		40,899				46,694
Substandard			—				—				—				—				—				—				762				762
Doubtful			—				—				—				—				—				—				—				—
Total	$		102		$		2,712		$		2,297		$		76		$		34		$		574		$		41,661		$		47,456
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Commercial Real Estate(3):
Pass	$		33,959		$		17,498		$		84,218		$		41,871		$		33,021		$		97,472		$		644		$		308,683
Special mention			—				—				—				—				895				1,646				—				2,541
Substandard			—				—				—				—				1,242				8,517				—				9,759
Doubtful			—				—				—				—				—				—				—				—
Total	$		33,959		$		17,498		$		84,218		$		41,871		$		35,158		$		107,636		$		644		$		320,984
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Commercial Loans:
Pass	$		3,232		$		981		$		1,980		$		483		$		349		$		1,745		$		2,725		$		11,496
Special mention			—				—				—				165				—				146				782				1,093
Substandard			—				—				—				—				—				2,183				956				3,139
Doubtful			—				—				—				—				—				—				—				—
Total	$		3,232		$		981		$		1,980		$		648		$		349		$		4,074		$		4,463		$		15,728
Current period gross charge-offs	$		—		$		—		$		—		$		—		$		—		$		—		$		—		$		—
Consumer Loans:
Pass	$		258		$		118		$		138		$		35		$		98		$		115		$		223		$		986
Substandard			—				—				—				—				—				—				4				4
Doubtful			—				—				—				—				—				—				—				—
Total	$		258		$		118		$		138		$		35		$		98		$		115		$		228		$		991
Current period gross charge-offs	$		5		$		—		$		2		$		—		$		—		$		—		$		34		$		41

(1)There were no one- to four-family construction loans at December 31, 2024.

(2)Home equity loans presented with an origination year represent home equity lines-of-credit which have been converted to term loans.

(3)Includes commercial construction loans.

Modifications with Borrowers Experiencing Financial Difficulty:

Occasionally, the Company modifies loans to borrowers in financial distress by providing modifications to loans that it would not normally grant. Such modifications could include principal forgiveness, term extension, a significant payment delay, an interest rate reduction or the addition of a co-borrower or guarantor. When principal forgiveness is provided, the amount of the forgiveness is charged-off against the allowance for credit losses.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses, a change to the allowance for credit losses is generally not recorded upon modification.

In some cases, the Company provides multiple types of modifications on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another modification may be granted, such as principal forgiveness.

21

There were no loans modified to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2025 or 2024.

There were no modified loans that were past due or on non-accrual as of September 30, 2025 or December 31, 2024.

There were no loans to borrowers experiencing financial difficulty during the nine months ended September 30, 2025 and 2024 that had a payment default and were modified in the twelve months prior.

Foreclosed real estate consists of property acquired in settlement of loans which is carried at its fair value less estimated selling costs. Write-downs from amortized cost to fair value less estimated selling costs are recorded at the date of acquisition or repossession and are charged to the allowance for credit losses. There was no foreclosed real estate at September 30, 2025, and December 31, 2024. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to local requirements of the applicable jurisdiction was $370,000 at September 30, 2025 and $927,000 at December 31, 2024.

Note 5 - Deposits

Deposits consist of the following at the dates indicated:

	September 30, 2025										December 31, 2024
						Weighted										Weighted
						Average										Average
	Amount					Rate					Amount					Rate
	(Dollars in thousands)
Demand deposits:
Non-interest bearing	$		89,052				—		%		$		96,412				—		%
Interest bearing			68,068				0.09						65,020				0.09
Money market accounts			170,269				2.36						149,550				2.26
Savings accounts			51,674				0.07						54,322				0.06
Time deposits			211,282				3.55						207,674				3.96
Total deposits	$		590,345				1.97		%		$		572,978				2.04		%

Note 6 – Earnings per Share

Earnings per share was calculated for the three and nine months ended September 30, 2025 and 2024, in accordance with ASC 260 - Earnings Per Share, which provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Basic earnings per share is based upon the weighted average number of common shares outstanding, exclusive of unearned shares held by the Employee Stock Ownership Plan of Lake Shore Bancorp, Inc. (the “ESOP”). Unvested shares of restricted stock which have voting rights and are eligible to receive dividends are included in the calculation of the weighted average number of common shares outstanding. Diluted earnings per share is based upon the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of dilutive securities. Stock options are regarded as potential common stock and are

22

considered in the diluted earnings per share calculations to the extent they would be dilutive and computed using the treasury stock method.

The calculated basic and diluted earnings per share are as follows. Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).

		Three Months Ended September 30,
		2025					2024
Numerator – net income		$		2,359,000			$		1,332,000
Denominator:
Basic weighted average shares outstanding				7,386,783					7,640,059
Increase in weighted average shares outstanding due to:
Stock options(1)				8,568					—
Diluted weighted average shares outstanding(1)				7,395,351					7,640,059
Earnings per share:
Basic		$		0.32			$		0.18
Diluted		$		0.32			$		0.18
		Nine Months Ended September 30,
		2025					2024
Numerator – net income		$		5,335,000			$		3,462,000
Denominator:
Basic weighted average shares outstanding				7,570,838					7,608,628
Increase in weighted average shares outstanding due to:
Stock options(1)				7,896					—
Diluted weighted average shares outstanding(1)				7,578,734					7,608,628
Earnings per share:
Basic		$		0.70			$		0.46
Diluted		$		0.70			$		0.46

(1)All stock options outstanding during the three and nine months ended September 30, 2025 were included in the calculation of diluted earnings per share as none had anti-dilutive effects. Weighted average stock options to purchase 39,484 shares under the Company's 2006 Stock Option Plan and 27,098 shares under the Company's 2012 Equity Incentive Plan ("EIP") at $10.61 and $7.89, respectively, were outstanding during the three months ended September 30, 2024, but were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive. Weighted average stock options to purchase 49,623 shares under the Company's 2006 Stock Option Plan and 22,719 shares under the 2012 Equity Incentive Plan at an exercise price of $10.61 and $7.89, respectively, were outstanding during the nine months ended September 30, 2024, but were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive.

Note 7 – Commitments to Extend Credit

The Company has commitments to extend credit with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition.

The Company’s exposure to credit losses is represented by the contractual amount of these commitments. There was a $342,000 and $316,000 allowance for credit losses associated with these commitments at September 30, 2025 and December 31, 2024, respectively.

23

The following commitments to extend credit were outstanding as of the dates specified:

		Contract Amount
		September 30,				December 31,
		2025				2024
		(Dollars in thousands)
Commitments to grant loans		$	16,646			$	3,098
Unfunded commitments to fund loans and lines of credit			90,808				96,711
Commercial and Standby letters of credit			720				765

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

Note 8 – Stock-based Compensation

As of September 30, 2025, the Company had three active stock-based compensation plans, which are described below. The compensation cost related to these plans was $161,000 and $109,000 for the three months ended September 30, 2025 and 2024, respectively, and $387,000 and $235,000 for the nine months ended September 30, 2025 and 2024, respectively, and is included within salary and benefits expense in the non-interest expense section of the consolidated statements of income.

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).

2006 Stock Option Plan

The Company’s 2006 Stock Option Plan (the “Stock Option Plan”), which was approved by the Company’s stockholders, permitted the grant of options to its employees and non-employee directors for up to 403,167 shares of common stock. The Stock Option Plan expired on October 24, 2016, and grants of options can no longer be awarded.

Both incentive stock options and non-qualified stock options have been granted under the Stock Option Plan. The exercise price of each stock option equals the market price of the Company’s common stock on the date of grant and an option’s maximum term is ten years. The stock options generally vest over a five year period.

A summary of the status of the Stock Option Plan during the nine months ended September 30, 2025 and 2024 is presented below:

		2025										2024
		Options				Weighted Average Exercise Price				Remaining Contractual Life		Options				Weighted Average Exercise Price				Remaining Contractual Life
Outstanding at beginning of year			37,696			$	10.61						79,745			$	10.61
Forfeited			—				—						(40,261	)			10.61
Outstanding at end of period			37,696			$	10.61			3.1 years			39,484			$	10.61			2.0 years
Options exercisable at end of period			37,696			$	10.61			3.1 years			39,484			$	10.61			2.0 years

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:At September 30, 2025, stock options granted under this plan had an intrinsic value of $90,000 and there were no remaining options available for grant under the Stock Option Plan. At September 30, 2025, all compensation cost and expense related to the Stock Option Plan had been recognized in prior periods.

2012 Equity Incentive Plan

The Company’s 2012 Equity Incentive Plan (the “2012 EIP”), which was approved by the Company’s stockholders on May 23, 2012, authorized the issuance of up to 243,882 shares of common stock pursuant to grants of restricted stock awards and up to 27,098 shares of common stock pursuant to grants of incentive stock options and non-qualified stock options, subject to permitted adjustments for certain corporate transactions. Employees and non-employee directors of Lake Shore Bancorp or its subsidiaries were eligible to receive awards under the 2012 EIP, except that non-employees may not be granted incentive stock options. The 2012 EIP expired on April 24, 2024, and grants of awards can no longer be made.

A summary of the status of unvested restricted stock awards under the 2012 EIP for the nine months ended September 30, 2025 and 2024 is as follows:

		For the Nine Months Ended September 30, 2025				Weighted Average Grant Price (per Share)				For the Nine Months Ended September 30, 2024				Weighted Average Grant Price (per Share)
Unvested shares outstanding at beginning of year			77,212			$	8.19				24,007			$	10.29
Granted			—				—				70,796				7.89
Vested			(44,416	)			8.39				(14,804	)			10.07
Unvested shares outstanding at end of period			32,796			$	7.92				79,999			$	8.21

As of September 30, 2025, there were 208,828 shares of restricted stock vested or distributed to eligible participants under the 2012 EIP and the plan expired on April 24, 2024. Accordingly, there were no remaining shares available for grant. Compensation expense related to unvested restricted stock awards under the EIP amounted to $22,000 and $82,000 for the three months ended September 30, 2025 and 2024, respectively. Compensation expense related to unvested restricted stock awards under the EIP amounted to $136,000 and $162,000 for the nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, $221,000 of unrecognized compensation cost related to unvested restricted stock awards is expected to be recognized over a period of 31.1 months.

A summary of the status of stock options under the 2012 EIP for the nine months ended September 30, 2025 and 2024 is presented below:

		2025														2024
		Options				Exercise Price				Intrinsic Value				Remaining Contractual Life		Options				Exercise Price				Intrinsic Value				Remaining Contractual Life
Outstanding at beginning of year			17,749			$	8.68										17,751			$	10.61
Granted			—				—										12,609				7.89
Forfeited			—				—										(3,261	)			10.61
Outstanding at end of period			17,749			$	8.68			$	77,000			6.4 years			27,098			$	9.34			$	26,000			5.6 years
Options exercisable at end of period			7,661			$	9.71			$	25,000			2.9 years			14,489			$	10.61			$	—			2.1 years

Compensation expense related to unvested stock options under the 2012 EIP amounted to $1,000 for the three months ended September 30, 2025 and 2024. Compensation expense related to unvested stock options under the 2012 EIP amounted to $4,000 and $2,000 for the nine months ended September 30, 2025 and 2024, respectively. At September 30, 2025, $20,000 of unrecognized compensation cost related to unvested stock options is expected to be recognized over a period of 3.6 years. During April 2024, the Company granted all remaining options available under the 2012 EIP. The 2012 EIP expired on April 24, 2024 and no additional options were available for grant nor issued after this date.

25

2025 Equity Incentive Plan

On February 4, 2025, the stockholders of Lake Shore Bancorp, Inc. approved the Company's 2025 Equity Incentive Plan ("2025 EIP") which authorized the issuance of up to 406,470 shares of common stock pursuant to grants of restricted stock, restricted stock units, non-qualified stock options, and incentive stock options. Employees of the Company and Lake Shore Bank and non-employee members of the Company's Board of Directors are eligible to receive grants of stock-based awards under the 2025 EIP.

The Compensation Committee of the Board of Directors granted restricted stock awards under the 2025 EIP during the nine months ended September 30, 2025 as follows:

Grant Date

Number of Restricted Stock Awards

Vesting

Fair Value per Share of Award on Grant Date

Awardees

March 12, 2025

6,395

100% on March 12, 2026

$

11.64

Non-employee directors

March 12, 2025

30,454

25% per year for four years with first vesting on March 12, 2026

$

11.64

Employees

A summary of the status of unvested restricted stock awards under the 2025 EIP for the nine months ended September 30, 2025 is as follows:

		At September 30, 2025				Weighted Average Grant Price (per Share)
Unvested shares outstanding at beginning of year			—			$	—
Granted			36,849				11.64
Unvested shares outstanding at end of period			36,849			$	11.64

As of September 30, 2025, there were no shares of restricted stock vested or distributed to eligible participants under the 2025 EIP. There were 369,621 remaining shares available for grant. Compensation expense related to unvested restricted stock awards under the 2025 EIP amounted to $41,000 for the three months ended September 30, 2025 and $90,000 for the nine months ended September 30, 2025. At September 30, 2025, $339,000 of unrecognized compensation cost related to unvested restricted stock awards is expected to be recognized over a period of 35.6 months.

Employee Stock Ownership Plan (“ESOP”)

The Company established the ESOP for the benefit of eligible employees of the Company and Bank. All Company and Bank employees meeting certain age and service requirements are eligible to participate in the ESOP. Participants’ benefits become fully vested after five years of service once the employee is eligible to participate in the ESOP. The Company utilized $2.6 million of the proceeds of its 2006 stock offering to extend a loan to the ESOP and the ESOP used such proceeds to purchase 322,534 shares of stock on the open market at an average price of $7.90 per share, plus commission expenses. As a result of the purchase of shares by the ESOP, total stockholders’ equity of the Company was reduced by $2.6 million. As part of the Conversion, the remaining balance of $1.2 million of the original 2006 ESOP loan was paid off and refinanced with a new loan to the ESOP. The Company utilized $4.0 million of the proceeds from the 2025 stock offering to extend a loan to the ESOP and the ESOP purchased 396,036 shares of stock in the new Company at an average cost of $10.00. As a result of the purchase of shares by the ESOP, total stockholders' equity of the Company was reduced by $4.0 million. As of September 30, 2025, the balance of the loan to the ESOP was $5.2 million and the fair value of unallocated shares was $6.7 million. As of September 30, 2025, there were 93,163 allocated shares and 514,296 unallocated shares compared to 89,582 allocated shares and 129,012 unallocated shares at December 31, 2024. The ESOP compensation expense was $95,000 for the three months ended September 30, 2025 and $27,000 for the three months ended September 30, 2024 based on 7,598 shares and 2,688 shares earned in each of those quarters, respectively. The ESOP compensation

26

expense was $156,000 for the nine months ended September 30, 2025 and $73,000 for the nine months ended September 30, 2024 based on 12,974 shares and 8,064 shares earned in each of those nine month periods.

Note 9 - Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of the Company’s financial instruments. However, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of September 30, 2025 and December 31, 2024 and have not been re-evaluated or updated for purposes of these unaudited consolidated financial statements subsequent to those respective dates. The estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported here.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities measurements (Level 1) and the lowest priority to unobservable input measurements (Level 3). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.

Level 3: Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the inputs and assumptions that market participants would use in pricing the assets or liabilities.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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The Company’s consolidated statements of financial condition contain investment securities that are recorded at fair value on a recurring basis. For financial instruments measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2025 and December 31, 2024 were as follows:

		Fair Value Measurements at September 30, 2025
							Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs					Significant Other Unobservable Inputs
		Fair Value					(Level 1)					(Level 2)					(Level 3)
			(Dollars in thousands)
Measured at fair value on a recurring basis:
Securities:
Debt Securities Available for Sale
U.S. government agencies		$		1,931			$		—			$		1,931			$		—
Municipal bonds				32,908					—					32,908					—
Mortgage-backed securities:
Collateralized mortgage obligations-private label				8					—					8					—
Collateralized mortgage obligations-government    sponsored entities				8,073					—					8,073					—
Government National Mortgage Association				46					—					46					—
Federal National Mortgage Association				8,702					—					8,702					—
Federal Home Loan Mortgage Corporation				4,090					—					4,090					—
Asset-backed securities:
Private label				27					—					27					—
Government sponsored entities				1					—					1					—
Total Debt Securities Available for Sale				55,786					—					55,786					—
Equity Securities				263					263					—					—
Total Securities		$		56,049			$		263			$		55,786			$		—

		Fair Value Measurements at December 31, 2024
							Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs					Significant Other Unobservable Inputs
		Fair Value					(Level 1)					(Level 2)					(Level 3)
			(Dollars in thousands)
Measured at fair value on a recurring basis:
Securities:
Debt Securities Available for Sale
U.S. government agencies		$		1,851			$		—			$		1,851			$		—
Municipal bonds				32,288					—					32,288					—
Mortgage-backed securities:
Collateralized mortgage obligations-private label				9					—					9					—
Collateralized mortgage obligations-government    sponsored entities				8,942					—					8,942					—
Government National Mortgage Association				50					—					50					—
Federal National Mortgage Association				9,013					—					9,013					—
Federal Home Loan Mortgage Corporation				4,240					—					4,240					—
Asset-backed securities:
Private label				28					—					28					—
Government sponsored entities				1					—					1					—
Total Debt Securities Available for Sale				56,422					—					56,422					—
Equity Securities				73					73					—					—
Total Securities		$		56,495			$		73			$		56,422			$		—

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Level 2 inputs for assets or liabilities measured at fair value on a recurring basis might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment projections, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. The following is a description of valuation methodologies used for financial assets recorded at fair value on a recurring basis:

•Investment securities - the fair values are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1) or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution date, market consensus prepayment projections, credit information, and the security’ terms and conditions, among other observations. Level 2 securities which are fixed income instruments that are not quoted on an exchange, but are traded in active markets, are valued using prices obtained from our custodian, who use third party data service providers.

In addition to disclosure of the fair value of assets on a recurring basis, GAAP requires disclosures for assets and liabilities measured at fair value on a non-recurring basis. The following is a description of the valuation methods used for assets that may be measured at fair value on a non-recurring basis.

Collateral-Dependent Loans. Loans for which repayment is substantially expected to be provided through the operations or sale of collateral are considered collateral dependent. They are held at the lower of cost or fair value, and are considered to be measured at fair value when recorded below cost. Collateral-dependent loans are valued based on the estimated fair value of the collateral, less estimated costs to sell at the reporting date, based on either a recent appraisal performed by a third-party independent appraiser or discounted cash flows based on current market conditions. Accordingly, collateral dependent loans are classified within Level 3 of the fair value hierarchy. The Company did not record an allowance for credit losses for its collateral-dependent loans as of September 30, 2025 and December 31, 2024.

Foreclosed Real Estate and Repossessed Assets. Foreclosed real estate and repossessed assets are held at the lower of cost or fair value and are considered to be measured at fair value when recorded below cost. The fair value of foreclosed real estate is calculated using independent appraisals, less estimated selling costs. Certain repossessed assets may require assumptions about factors that are not observable in an active market when determining fair value. Accordingly, foreclosed real estate and repossessed assets are classified within Level 3 of the fair value hierarchy. There was no foreclosed real estate at September 30, 2025 and December 31, 2024. The Company did not have repossessed assets at September 30, 2025 and December 31, 2024.

Mortgage Servicing Rights. Mortgage servicing rights do not trade in an active market with readily observable market data. As a result, the Company estimates the fair value of loan servicing rights by using a discounted cash flow model to calculate the present value of estimated future net servicing income. The key assumptions used in the model include the estimated life of loans sold with servicing retained and the estimated cost to service the loans. Loan servicing rights are classified as Level 3 measurements due to the use of unobservable inputs, as well as management judgment and estimation. Mortgage servicing rights amounted to $169,000 and $177,000 at September 30, 2025 and December 31, 2024, respectively, and were included as a component of other assets on the consolidated statements of financial condition.

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For assets subject to measurement at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2025 and December 31, 2024 were as follows:

		Fair Value Measurements
							Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs					Significant Other Unobservable Inputs
		Fair Value					(Level 1)					(Level 2)					(Level 3)
			(Dollars in thousands)
Measured at fair value on a non-recurring basis:
At September 30, 2025
Mortgage servicing rights		$		169			$		—			$		—			$		169
At December 31, 2024
Mortgage servicing rights		$		177			$		—			$		—			$		177

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)

Fair Value Estimate

Valuation Technique

Unobservable Input

Range

Weighted Average

At September 30, 2025

Mortgage servicing rights

$

169

Discounted Cash Flow Model (1)

Servicing Fees

0.25%

0.25%

Servicing Costs

0.10%

0.10%

Estimated Life of Loans

4.24 - 8.44 years

6.34 years

At December 31, 2024

Mortgage servicing rights

177

Discounted Cash Flow Model (1)

Servicing Fees

0.25%

0.25%

Servicing Costs

0.10%

0.10%

Estimated Life of Loans

5.17 - 6.17 years

5.67 years

(1)The fair value is based on a discounted cash flow model. The model's key assumptions are the estimated life of loans sold with servicing retained and the estimated cost to service the loans.

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The carrying amount and estimated fair value, based on the exit price notion, of the Company’s financial instruments, whether carried at cost or fair value, are as follows:

		Fair Value Measurements at September 30, 2025
		Carrying					Estimated					Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs					Significant Other Unobservable Inputs
		Amount					Fair Value					(Level 1)					(Level 2)					(Level 3)
		(Dollars in thousands)
Financial assets:
Cash and cash equivalents		$		83,638			$		83,638			$		83,638			$		—			$		—
Securities				56,049					56,049					263					55,786					—
Federal Home Loan Bank stock				763					763					—					763					—
Loans receivable, net				552,611					542,410					—					—					542,410
Accrued interest receivable				3,003					3,003					—					3,003					—
Bank-owned life insurance				29,287					29,287					—					29,287					—
Mortgage servicing rights				169					169					—					—					169
Financial liabilities:
Deposits				590,345					589,721					—					589,721					—
Long-term debt				2,000					1,990					—					1,990					—
Accrued interest payable				42					42					—					42					—

		Fair Value Measurements at December 31, 2024
		Carrying					Estimated					Quoted Prices in Active Markets for Identical Assets					Significant Other Observable Inputs					Significant Other Unobservable Inputs
		Amount					Fair Value					(Level 1)					(Level 2)					(Level 3)
Financial assets:
Cash and cash equivalents		$		33,131			$		33,131			$		33,131			$		—			$		—
Securities				56,495					56,495					73					56,422					—
Federal Home Loan Bank stock				1,157					1,157					—					1,157					—
Loans receivable, net				544,620					525,728					—					—					525,728
Accrued interest receivable				2,819					2,819					—					2,819					—
Bank-owned life insurance				29,340					29,340					—					29,340					—
Mortgage servicing rights				177					177					—					—					177
Financial liabilities:
Deposits				572,978					572,082					—					572,082					—
Long-term debt				10,250					10,199					—					10,199					—
Accrued interest payable				99					99					—					99					—

Note 10 – Treasury Stock

Share and per share information disclosed herein which relate to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio (1.3549) applied in the Conversion.

The Company’s previous stock repurchase program adopted on August 13, 2021 was terminated effective July 18, 2025 in connection with the Conversion, and 1,459,691 shares of common stock held in treasury at a cost of $13.1 million were retired. During the three and nine months ended September 30, 2025, the Company did not repurchase any shares of common stock under the previous stock repurchase program. During the nine months ended September 30, 2025, the Company transferred 36,849 shares of common stock out of treasury stock under the 2025 Equity Incentive Plan, at an average cost of $6.93 per share, to fund awards that had been granted under the plan. During the nine months ended

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September 30, 2025, the Company repurchased 4,405 shares upon vesting of shares under the 2012 Equity Incentive Plan for the purpose of remitting payroll taxes on behalf of awardees who were employees, at an average cost of $11.51 per share.

During the three and nine months ended September 30, 2024, the Company did not repurchase any shares of common stock under the previous stock repurchase program. During the nine months ended September 30, 2024, the Company transferred 70,796 shares of common stock out of treasury stock reserved for the 2012 Equity Incentive Plan, at an average cost of $7.89 per share, to fund awards that had been granted under the plan. During the nine months ended September 30, 2024, the Company repurchased 2,038 shares upon vesting of shares under the 2012 Equity Incentive Plan for the purpose of remitting payroll taxes on behalf of awardees who were employees, at an average cost of $8.58 per share.

On October 22, 2025, the Company adopted a plan to repurchase up to 5% of its outstanding shares of common stock. Share repurchases under the plan may occur following the one-year anniversary of the Conversion, or on July 20, 2026. Refer to Note 1 for additional details.

Note 11 – Other Comprehensive Income

In addition to presenting the consolidated statements of other comprehensive income herein, the following table shows the tax effects allocated to the Company’s single component of other comprehensive income for the periods presented:

		For the Three Months September 30, 2025												For the Three Months September 30, 2024
		Pre-Tax Amount				Tax Expense				Net of Tax Amount				Pre-Tax Amount				Tax Benefit (Expense)				Net of Tax Amount
		(Unaudited)
		(Dollars in thousands)
Net unrealized gains on securities available for sale:
Net unrealized gains arising during the period		$	1,452			$	(305	)		$	1,147			$	2,362			$	(496	)		$	1,866
Less: reclassification adjustment related to:
Recovery on previously impaired investment securities included in net income			(1	)			—				(1	)			(1	)			—				(1	)
Total Other Comprehensive Income		$	1,451			$	(305	)		$	1,146			$	2,361			$	(496	)		$	1,865

		For the Nine Months September 30, 2025												For the Nine Months September 30, 2024
		Pre-Tax Amount				Tax (Expense)				Net of Tax Amount				Pre-Tax Amount				Tax Benefit (Expense)				Net of Tax Amount
		(Unaudited)
		(Dollars in thousands)
Net unrealized gains on securities available for sale:
Net unrealized gains arising during the period		$	1,740			$	(365	)		$	1,375			$	822			$	(173	)		$	649
Less: reclassification adjustment related to:
Recovery on previously impaired investment securities included in net income			(4	)			1				(3	)			(4	)			1			$	(3	)
Total Other Comprehensive Income		$	1,736			$	(364	)		$	1,372			$	818			$	(172	)		$	646

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The following table presents the amounts reclassified out of the single component of the Company’s accumulated other comprehensive loss for the indicated periods:

	Amounts Reclassified from Accumulated
Details about Accumulated Other	Other Comprehensive Loss									Affected Line Item
Comprehensive Income (Loss)	for the three months ended September 30,									on the Consolidated
Components	2025					2024				Statements of Income
	(Dollars in thousands)
Net unrealized (gains) on securities available for sale:
Recovery on previously impaired investment securities			(1	)			(1	)		Recovery on previously impaired investment securities
Total reclassification for the period		$	(1	)		$	(1	)		Increase to Net Income

	Amounts Reclassified from Accumulated
Details about Accumulated Other	Other Comprehensive Loss									Affected Line Item
Comprehensive Income (Loss)	for the nine months ended September 30,									on the Consolidated
Components	2025					2024				Statements of Income
	(Dollars in thousands)
Net unrealized (gains) on securities available for sale:
Recovery on previously impaired investment securities		$	(4	)		$	(4	)		Recovery on previously impaired investment securities
Provision for income tax expense			1				1			Income tax expense
Total reclassification for the period		$	(3	)		$	(3	)		Increase to Net Income

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Safe-Harbor

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on current expectations, estimates and projections about the Company’s and the Bank’s industry, and management’s beliefs and assumptions. Words such as anticipates, expects, intends, plans, believes, estimates and variations of such words and expressions are intended to identify forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast. Therefore, actual results may differ materially from those expressed or forecast in such forward-looking statements.

Potential risks and uncertainties that could cause our actual results to differ from those anticipated in any forward-looking statements include, but are not limited to, those described in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, Part II, Item 1A of this Quarterly Report on Form 10-Q and the following:

•the strength of the United States economy in general and of the local economies in which we conduct operations;

•the effect of change in monetary and fiscal policy, including changes in interest rate policies of the Board of Governors of the Federal Reserve System;

•inflation, and market and monetary fluctuations;

•climate change;

•tariffs;

•deterioration in the credit quality of our loan portfolio and/or the value of the collateral securing repayment of loans;

•unanticipated changes in our liquidity position;

•reduction in the value of our investment securities;

•the cost and ability to attract and retain key employees;

•regulatory or legal developments, tax policy changes;

•our ability to implement and execute our business plan and strategy and expand our operations;

•the ability of our customers to make loan payments;

•the effect of competition on rates of deposit and loan growth and net interest margin;

•our ability to continue to control costs and expenses;

•any future FDIC insurance premium increases, or special assessment may adversely affect our earnings;

•risks from data loss or other security breaches, including a breach of our operational or security systems, policies, or procedures, including cyber-attacks on us or on our third-party vendors or service providers;

•the failure of financial institutions may adversely affect our business, and the market price of our common stock;

•risks relating to pandemics and other public health issues;

•risks relating to geopolitical conflicts;

•changes in accounting principles, policies, or guidelines;

•our success in managing the risks involved in our business; and

•other economic, competitive, geopolitical, governmental, regulatory and technological factors affecting our operations, pricing, products and services.

Any and all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any other public statements we make may differ from actual outcomes. They can be affected by inaccurate assumptions we might make or known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

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Overview

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition, results of operations and other relevant statistical data. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of September 30, 2025 compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and nine months ended September 30, 2025 and 2024.

Our results of operations depend primarily on our net interest income, which is the difference between the interest income we earn on loans and investments and the interest expense we pay on deposits, borrowings, and other interest-bearing liabilities. Net interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates we earn or pay on these balances.

Our operations are also affected by non-interest income, such as service charges and fees, debit card fees, earnings on bank owned life insurance, and other non-interest income activities as well as non-interest expenses which include salaries and employee benefits, occupancy and equipment costs, data processing, professional services, advertising, FDIC insurance, and other general and administrative expenses.

Financial institutions like us, in general, are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing and commercial real estate, competition among lenders, interest rate conditions, and funds availability. Our operations and lending are principally concentrated in the Western New York area, and our operations and earnings are influenced by local economic conditions. Deposit balances and cost of funds are influenced by prevailing market rates on competing investments, customer preferences, and levels of personal income and savings in our primary market area. Operations are also significantly impacted by government policies and actions of regulatory authorities. Future changes in applicable law, regulations, or government policies may materially impact the Company.

Recent Events

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 pursuant to which Lake Shore, MHC, would undertake a "second-step" conversion (the “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. In addition, Lake Shore Savings Bank would convert its charter from a federal savings bank to a New York commercial bank renamed Lake Shore Bank.

Effective July 18, 2025, Lake Shore Bancorp, Inc. (“Lake Shore Bancorp”), a new corporation incorporated under the laws of the State of Maryland, became the bank holding company of Lake Shore Bank, a New York commercial bank and its only wholly-owned subsidiary in connection with the completion of Conversion. 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. The Company used $4.0 million of the proceeds to fund an addition to its Employee Stock Ownership Plan ("ESOP") loan for the acquisition of an additional 396,036 shares at $10.00 per share. Expenses incurred related to the offering were approximately $2.3 million and have been recorded against offering proceeds.

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 July 18, 2025 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

35

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.

Share and per share amounts related to periods prior to the date of Conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the Conversion (1.3549).

As previously disclosed on a Current Report on Form 8-K, on October 22, 2025, 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 November 12, 2025 to stockholders of record as of November 3, 2025.

As previously disclosed on a Current Report on Form 8-K, on October 22, 2025, the Board of Directors of the Company adopted a plan to repurchase up to 5% of its outstanding shares of common stock, which may commence following the one-year anniversary of the Conversion, or on July 20, 2026.

Management Strategy

There have been no material changes in the Company’s management strategy from what was disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Critical Accounting Estimates

The Company's consolidated financial statements are prepared in accordance with GAAP. As a result, the Company is required to make certain estimates, judgments, and assumptions that it believes are reasonable based upon the information available at that time. Critical accounting estimates includes the areas where the Company has made what it considers to be particularly difficult, subjective, or complex judgments concerning estimates, and where these estimates can significantly affect the Company's financial results under different assumptions and conditions. These estimates, judgments, and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different from these estimates. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. Significant accounting policies followed by the Company are presented in Note 2 - Summary of Significant Accounting Policies, to the Audited Consolidated Financial Statements included within Part II. Item 8. of its Annual Report on Form 10-K for the year ended December 31, 2024, and in Note 1: Basis of Presentation and Significant Accounting Policies and Estimates in Part I. Item 1. of this Form 10-Q.

Allowance for Credit Losses

Management considers the allowance for credit losses to be a critical accounting estimate, given the uncertainty in estimating lifetime credit losses attributable to its portfolios of assets exhibiting credit risk, particularly in its loan portfolio, and the material effect that such judgments can have on our results of operations. Determining the amount requires significant judgment on the part of management, is multi-faceted, and can be imprecise. The level of the allowance for credit losses on loans is based on management’s ongoing review of all relevant information, from internal and external sources, relating to past events, current conditions, and expectations of the future based on reasonable and supportable forecasts.

The allowance is established through a provision for credit losses in the Consolidated Statements of Income, and evaluation of the adequacy of the allowance for credit losses is performed by management on a quarterly basis. While management uses available information to anticipate credit losses, future additions to the allowance may be necessary based on changes in economic conditions or the composition of its portfolios. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses. As of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans totaled $4.9 million and $5.1 million, respectively. Due to the nature and composition of the Bank's lending activities, a significant portion of the allowance for credit losses on loans is allocated to the commercial real estate portfolio. As of September 30, 2025 and December 31, 2024, the allowance for credit losses on loans allocated to the total commercial real estate portfolio was $3.9 million, or 80.2%, and $4.2 million, or 81.3%, respectively.

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The Company's methodology for maintaining its allowance for credit losses is based on historical loan-level performance experience and data, peer data, current economic information, and reasonable and supportable forecasts. Accordingly, the estimation of the allowance for credit losses is impacted by the economic forecasts utilized, which require the use of significant judgment. Deterioration of forecasted economic conditions may lead to further required increases to the allowance for credit losses. Conversely, improvements to forecasted economic conditions may warrant further reductions to the allowance for credit losses. In estimating the allowance for credit losses, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate.

The allowance for credit losses is sensitive to various forecasted macroeconomic drivers, including the Federal Open Market Committee's ("FOMC") median forecasted U.S. civilian unemployment rate and the year-over-year change in U.S. Gross Domestic Product ("GDP"). While it is difficult to estimate how potential changes to various factors may impact the allowance for credit losses because such changes to factors may not occur at the same rate or in the same direction, management compared the modeled allowance for credit losses on loans to a hypothetical model using a downside economic forecast. Using an immediate "shock" or increase of 20 basis points in the FOMC's projected rate of U.S. civilian unemployment, and a decrease of 100 basis points in the FOMC's projected rate of U.S. GDP growth, this would increase the model's total calculated allowance for credit losses on loans by $297,000, or 6.1%, representing a five basis points increase in the coverage ratio of the allowance for credit losses as a percentage of loans at amortized cost, assuming all other quantitative and qualitative factors are kept at current levels, as of September 30, 2025. This example is only one of the numerous possible economic scenarios that could be utilized in assessing the sensitivity of the allowance for credit losses and does not represent management’s assumptions or judgment of factors as of September 30, 2025.

Unexpected changes in economic growth could adversely affect our results of operations, including causing increases in delinquencies and default rates on loans, which would adversely impact our charge-offs, allowance for credit losses, and provision for credit losses. Deterioration in real estate values, employment data and household incomes may also result in higher credit losses for us. Also, in the ordinary course of business, we may be subject to a concentration of credit risk to a particular industry, counterparty, borrower or issuer. A deterioration in the financial condition or prospects of a particular industry or a failure or downgrade of, or default by, any particular entity or group of entities could negatively impact our business, perhaps materially, and the systems by which we set limits and monitor the level of our credit exposure to individual entities and industries, may not function as we have anticipated.

Analysis of Net Interest Income

Net interest income represents the difference between the interest we earn on our interest-earning assets, such as commercial and residential mortgage loans and investment securities, and the expense we pay on interest-bearing liabilities, such as deposits and borrowings. Net interest income depends on both the volume of our interest-earning assets and interest-bearing liabilities and the interest rates we earn or pay on them.

Average Balances, Interest and Average Yields. The following tables set forth certain information relating to our average balance sheets for each principal category, and the amount of interest income or expense associated with that category, as well as corresponding average yields earned and rates paid for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities, respectively, for the periods presented. Average balances are derived from daily balances over the periods indicated. The average balances for loans are net of allowance for credit losses but include non-accrual loans. The loan yields include net amortization of certain deferred fees and costs that are considered adjustments to yields. The net amortization of deferred loan fees and costs were $112,000 and $103,000 for the three months ended September 30, 2025 and 2024, respectively. The net

37

amortization of deferred loan fees and costs were $275,000 and $369,000 for the nine months ended September 30, 2025 and 2024, respectively. Interest income on securities does not include a tax equivalent adjustment for tax exempt securities.

		For the Three Months Ended														For the Three Months Ended
		September 30, 2025														September 30, 2024
		Average					Interest Income/					Yield/				Average					Interest Income/					Yield/
		Balance					Expense					Rate(2)				Balance					Expense					Rate(2)
		(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits		$		73,188			$		793				4.33	%		$		54,527			$		716				5.25	%
Securities(1)				55,750					365				2.62	%				59,536					405				2.72	%
Loans, including fees				554,615					8,193				5.91	%				542,612					7,730				5.70	%
Total interest-earning assets				683,553			$		9,351				5.47	%				656,675			$		8,851				5.39	%
Other assets				56,139														48,797
Total assets		$		739,692												$		705,472
Interest-bearing liabilities
Demand & NOW accounts		$		64,619			$		15				0.09	%		$		66,739			$		15				0.09	%
Money market accounts				163,533					1,053				2.58	%				145,641					986				2.71	%
Savings accounts				47,677					9				0.08	%				57,772					10				0.07	%
Time deposits				210,852					1,889				3.58	%				219,166					2,308				4.21	%
Total interest-bearing deposits				486,681					2,966				2.44	%				489,318					3,319				2.71	%
Borrowed funds & other interest-bearing liabilities				2,315					30				5.18	%				20,479					149				2.91	%
Total interest-bearing liabilities				488,996			$		2,996				2.45	%				509,797			$		3,468				2.72	%
Other non-interest bearing liabilities				121,512														107,327
Stockholders' equity				129,184														88,348
Total liabilities & stockholders' equity		$		739,692												$		705,472
Net interest income							$		6,355												$		5,383
Interest rate spread													3.02	%													2.67	%
Net interest margin													3.72	%													3.28	%

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.00% and 3.11% for the three months ended September 30, 2025 and 2024, respectively. Yields above are not presented on a tax equivalent basis.

(2) Annualized.

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		For the Nine Months Ended														For the Nine Months Ended
		September 30, 2025														September 30, 2024
		Average					Interest Income/					Yield/				Average					Interest Income/					Yield/
		Balance					Expense					Rate(2)				Balance					Expense					Rate(2)
		(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits		$		41,485			$		1,297				4.17	%		$		50,409			$		1,962				5.19	%
Securities(1)				56,585					1,113				2.62	%				60,082					1,243				2.76	%
Loans, including fees				551,275					24,415				5.91	%				549,925					23,010				5.58	%
Total interest-earning assets				649,345			$		26,825				5.51	%				660,416			$		26,215				5.29	%
Other assets				53,523														49,771
Total assets		$		702,868												$		710,187
Interest-bearing liabilities
Demand & NOW accounts		$		63,920			$		46				0.10	%		$		67,882			$		48				0.09	%
Money market accounts				156,626					2,875				2.45	%				142,078					2,899				2.72	%
Savings accounts				53,146					26				0.07	%				60,319					31				0.07	%
Time deposits				212,260					5,809				3.65	%				223,108					6,956				4.16	%
Total interest-bearing deposits				485,952					8,756				2.40	%				493,387					9,934				2.68	%
Borrowed funds & other interest-bearing liabilities				4,126					127				4.10	%				25,099					558				2.96	%
Total interest-bearing liabilities				490,078			$		8,883				2.42	%				518,486			$		10,492				2.70	%
Other non-interest bearing liabilities				108,710														104,728
Stockholders' equity				104,080														86,973
Total liabilities & stockholders' equity		$		702,868												$		710,187
Net interest income							$		17,942												$		15,723
Interest rate spread													3.09	%													2.59	%
Net interest margin													3.68	%													3.17	%

(1) The tax equivalent adjustment for bank qualified tax exempt municipal securities, using a federal statutory rate of 21%, results in rates of 3.02% and 3.14% for the nine months ended September 30, 2025 and 2024, respectively. Yields above are not presented on a tax equivalent basis.

(2) Annualized.

Rate Volume Analysis. The following tables analyze the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. The tables show the amount of the change in interest income or expense caused by either changes in outstanding balances (volume) or changes in interest rates. The effect of a change in volume is measured by applying the average rate during the later period to the volume change between

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the two periods. The effect of changes in rate is measured by applying the change in rate between the two periods to the average volume during the first period.

		Three Months Ended September 30, 2025
		Compared to
		Three Months Ended September 30, 2024
		Rate					Volume					Net Change
			(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits		$		(125	)		$		202			$		77
Securities				(15	)				(25	)				(40	)
Loans, including fees				286					177					463
Total interest-earning assets				146					354					500
Interest-bearing liabilities:
Demand & NOW accounts				—					—					—
Money market accounts				(48	)				115					67
Savings accounts				1					(2	)				(1	)
Time deposits				(345	)				(74	)				(419	)
Total deposits				(392	)				39					(353	)
Other interest-bearing liabilities:
Borrowed funds & other interest-bearing liabilities				116					(235	)				(119	)
Total interest-bearing liabilities				(276	)				(196	)				(472	)
Total change in net interest income		$		422			$		550			$		972

		Nine Months Ended September 30, 2025
		Compared to
		Nine Months Ended September 30, 2024
		Rate					Volume						Net Change
		(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits		$		(386	)		$		(279	)		$		(665	)
Securities				(61	)				(69	)				(130	)
Loans, including fees				1,345					60					1,405
Total interest-earning assets				898					(288	)				610
Interest-bearing liabilities:
Demand & NOW accounts				1					(3	)				(2	)
Money market accounts				(291	)				267					(24	)
Savings accounts				(1	)				(4	)				(5	)
Time deposits				(850	)				(297	)				(1,147	)
Total deposits				(1,141	)				(37	)				(1,178	)
Other interest-bearing liabilities:
Borrowed funds & other interest-bearing liabilities				215					(646	)				(431	)
Total interest-bearing liabilities				(926	)				(683	)				(1,609	)
Total change in net interest income		$		1,824			$		395			$		2,219

As shown in the above tables, the increase in net interest income for the three months ended September 30, 2025 when compared to the three months ended September 30, 2024 was primarily impacted by an increase in the average balance of interest-earning assets, a decrease in the average interest rate paid on interest-bearing liabilities, a decrease in the average balance of interest-bearing liabilities, and an increase in the average yield of interest-earning assets. The average balance of interest-earning assets increased by $26.9 million to $683.6 million for the three months ended September 30, 2025 as compared to $656.7 million for the three months ended September 30, 2024. The average interest rate paid on interest-bearing liabilities decreased 27 basis points from 2.72% during the three months ended September 30, 2024 to 2.45% during the three months ended September 30, 2025. The decrease in the average interest rate paid on interest-bearing liabilities during the three months ended September 30, 2025 was primarily due to a 27 basis points decrease in the average interest

40

rate paid on deposit accounts. The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates and time deposit repricing. The average balance of interest-bearing liabilities decreased $20.8 million, from $509.8 million during the three months ended September 30, 2024 to $489.0 million during the three months ended September 30, 2025 as a result of decreases in the average balance of borrowed funds and other interest-bearing liabilities of $18.2 million and in the average balance of deposits of $2.6 million. The average yield earned on interest-earning assets increased eight basis points from 5.39% during the three months ended September 30, 2024 to 5.47% during the three months ended September 30, 2025. The increase in the average yield of interest-earning assets was primarily due to a 21 basis points increase in the average yield on the loan portfolio when compared to the prior year period. Net interest margin increased to 3.72% for the three months ended September 30, 2025 as compared to 3.28% for the same period of the prior year.

As shown in the above tables, the increase in net interest income for the nine months ended September 30, 2025 was primarily impacted by a decrease in the average interest rate paid on interest-bearing liabilities, an increase in the average yield of interest-earning assets, and a decrease in the average balance of interest-bearing liabilities. This increase was partially offset by a decrease in the average balance of interest-earning assets when compared to the same period in the prior year. The average interest rate paid on interest-bearing liabilities decreased 28 basis points from 2.70% during the nine months ended September 30, 2024 to 2.42% during the nine months ended September 30, 2025. The decrease in the average interest rate paid on interest-bearing liabilities during the nine months ended September 30, 2025 was primarily due to a 28 basis points decrease in the average interest rate paid on deposit accounts. The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates and time deposit repricing. The average yield of interest-earning assets increased by 22 basis points to 5.51% for the nine months ended September 30, 2025 as compared to the same period in the prior year primarily as a result of a 33 basis points increase in the average yield of the loan portfolio. The average balance of interest-bearing liabilities decreased $28.4 million, from $518.5 million during the nine months ended September 30, 2024 to $490.1 million during the nine months ended September 30, 2025 as a result of decreases of the average balance of borrowed funds and other interest-bearing liabilities of $21.0 million and decreases in the average balance of deposits of $7.4 million. The average balance of interest-earning assets decreased by $11.1 million to $649.3 million for the nine months ended September 30, 2025 as compared to $660.4 million for the nine months ended September 30, 2024. The decrease in the average balance of interest-earning assets was primarily due to an $8.9 million, or 17.7%, decrease in average interest-earning deposits when compared to the prior year period. Net interest margin increased to 3.68% for the nine months ended September 30, 2025 as compared to 3.17% for the same period of the prior year.

Comparison of Financial Condition at September 30, 2025 and December 31, 2024

Total assets at September 30, 2025 were $742.8 million, an increase of $57.3 million, or 8.4%, as compared to $685.5 million at December 31, 2024 primarily due to increases in cash and cash equivalents and loans receivable, net.

Cash and cash equivalents increased by $50.5 million, or 152.4%, from $33.1 million at December 31, 2024 to $83.6 million at September 30, 2025. The increase in cash and cash equivalents was primarily due to an increase in interest earning deposits of $49.9 million, or 164.1%, as the result of the second step conversion and offering that was completed during the third quarter of 2025.

Securities, at fair value, decreased by $446,000, or 0.8%, from $56.5 million at December 31, 2024 to $56.0 million at September 30, 2025, primarily due to securities paydowns of $2.3 million, partially offset by a $1.7 million increase in the market value of the securities.

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Net loans receivable increased during the nine months ended September 30, 2025, as shown in the table below:

		At September 30,					At December 31,					Change
		2025					2024					$					%
		(Dollars in thousands)
Real Estate Loans:
Residential, one- to four-family(1)		$		152,011			$		161,331			$		(9,320	)			(5.8	)	%
Home equity				47,330					47,456					(126	)			(0.3	)	%
Commercial(2)				324,449					320,984					3,465				1.1		%
Total real estate loans				523,790					529,771					(5,981	)			(1.1	)	%
Other Loans:
Commercial				18,068					15,728					2,340				14.9		%
Consumer				12,539					991					11,548			NM
Total gross loans				554,397					546,490					7,907				1.4		%
Allowance for credit losses on loans				(4,869	)				(5,133	)				264				(5.1	)	%
Net deferred loan costs				3,083					3,263					(180	)			(5.5	)	%
Loans receivable, net		$		552,611			$		544,620			$		7,991				1.5		%

(1)There were no one- to four- family construction loans as of September 30, 2025 or December 31, 2024.

(2)Includes commercial construction loans.

The loans receivable, net balance increased $8.0 million, or 1.5%, from $544.6 million at December 31, 2024 to $552.6 million at September 30, 2025. The increase was primarily due to increases in consumer loans and commercial real estate loans, partially offset by a decrease in residential, one- to four-family real estate loans. During the nine months ended September 30, 2025, we remained strategically focused on originating shorter duration, adjustable-rate loans to diversify our asset mix and to manage interest rate risk while continuing to reduce our reliance on wholesale funding sources.

Asset Quality. The following tables set forth activity in our allowance for credit losses on loans and other ratios at or for the dates indicated:

		At or For the Nine Months Ended September 30,
		2025					2024
		(Dollars in thousands)
Balance at beginning of period		$		5,133			$		6,463
Credit to provision for credit losses				(249	)				(955	)
Charge-offs:
Other loans:
Consumer				(21	)				(29	)
Total charge-offs				(21	)				(29	)
Recoveries:
Real estate loans:
Residential, one- to four-family				4					8
Other loans:
Consumer				2					7
Total recoveries				6					15
Net (charge-offs) recoveries				(15	)				(14	)
Balance at end of period		$		4,869			$		5,494
		At September 30,					At December 31,
		2025					2024
Average loans outstanding, including fees		$		551,275			$		547,525
Allowance for credit losses as a percent of loans at amortized cost				0.87		%			0.93		%
Allowance for credit losses as a percent of non-performing loans at amortized cost				265.57		%			134.91		%

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When compared to December 31, 2024, the current modeled allowance for credit losses related to the loan portfolio decreased by approximately $263 thousand, or 5.13%, which was comprised of a decrease of $354 thousand due to a decrease in reserve rate for the blended portfolio, partially offset by an increase of $91 thousand related to an increase in loan balance. Such allowance for credit losses was calculated utilizing a discounted cash flow model as further described in Part I Item 1 - Note 1 - Basis of Presentation and Significant Accounting Policies and Estimates.

			For the Nine Months Ended September 30,
			2025					2024
Ratio of net recoveries (charge-offs) to average loans outstanding by loan type, annualized:
Real estate loans:
Residential, one- to four-family				—		%			0.01		%
Home equity				—		%			—		%
Commercial				—		%			—		%
Other loans:
Commercial				—		%			—		%
Consumer				(0.20	)	%			(2.81	)	%
Ratio of net recoveries to average loans outstanding				—		%			—		%

For the nine months ended September 30, 2025, consumer loan net charge-offs to average consumer loans outstanding, annualized, improved to (0.20)% from (2.81)% for the prior year period. This improvement was primarily driven by an increase in average consumer loans outstanding of $8.6 million for the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

		At September 30,					At December 31,
		2025					2024
			(Dollars in thousands)
Loans accounted for on a non-accrual basis:
Real estate loans:
Residential, one- to four-family		$		1,631			$		1,891
Home equity				109					683
Commercial(1)				93					1,226
Other loans:
Consumer				—					4
Total non-accrual loans				1,833					3,804
Total non-performing loans				1,833					3,804
Foreclosed real estate				—					—
Total non-performing assets		$		1,833			$		3,804
Ratios:
Non-performing loans as a percent of total loans at amortized cost:				0.33		%			0.69		%
Non-performing assets as a percent of total assets:				0.25		%			0.55		%

(1) Includes Commercial construction loans.

Total non-performing assets decreased by $2.0 million, or 51.8%, to $1.8 million at September 30, 2025 from $3.8 million at December 31, 2024, due to a decrease in non-accrual loans of $2.0 million. Contributing to this decrease was one commercial relationship representing two loans with a total amortized cost of $1.2 million being sold at foreclosure and one nonaccrual home equity loan with an amortized cost of $545,000 being paid in full during the second quarter of 2025. The Company had no loans past due 90 days or more but still accruing at September 30, 2025 or December 31, 2024.

Other assets decreased $490,000, or 4.6%, to $10.2 million at September 30, 2025 from $10.7 million at December 31, 2024 as a result of normal operations.

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The table below shows changes in deposit balances by type of deposit account between September 30, 2025 and December 31, 2024:

		At September 30,					At December 31,					Change
		2025					2024					$					%
		(Dollars in thousands)
Core deposits
Demand deposits and NOW accounts:
Non-interest bearing		$		89,052			$		96,412			$		(7,360	)			(7.6	)	%
Interest bearing				68,068					65,020					3,048				4.7		%
Time deposits less than or equal to $250,000				179,652					173,745					5,907				3.4		%
Money market				170,269					149,550					20,719				13.9		%
Savings				51,674					54,322					(2,648	)			(4.9	)	%
Total core deposits				558,715					539,049					19,666				3.6		%
Non-core deposits
Time deposits greater than $250,000				31,630					33,929					(2,299	)			(6.8	)	%
Total non-core deposits				31,630					33,929					(2,299	)			(6.8	)	%
Total deposits		$		590,345			$		572,978			$		17,367				3.0		%

The increase in total deposits was primarily due to the 13.9% increase in money market accounts, a 3.4% increase in time deposits less than or equal to $250,000, and a 4.7% increase in interest bearing transaction accounts. These increases were partially offset by a 7.6% decrease in non-interest bearing transaction accounts, a 4.9% decrease in savings accounts and a 6.8% decrease in time deposits greater than $250,000. The increase in core time deposits and money market deposits was primarily due to an increase in customer demand for these types of deposit products as the result of the competitive interest rate environment. Our strategic focus remains centered on organic growth of deposits among our retail and commercial customers to reduce our reliance on wholesale funding and to strengthen customer relationships. At September 30, 2025 and December 31, 2024, our percentage of uninsured deposits to total deposits was 13.3% and 13.5%, respectively.

During the nine months ended September 30, 2025, long-term borrowings decreased by $8.3 million, or 80.5%, to $2.0 million at September 30, 2025 from $10.3 million at December 31, 2024 in connection with the repayment of $8.3 million of long-term debt with the FHLBNY. The borrowings were paid off at maturity as part of a balance sheet management strategy to focus on organic deposit growth and reduce reliance on wholesale funding sources.

Total stockholders’ equity increased $49.4 million, or 55.0%, to $139.3 million at September 30, 2025 from $89.9 million at December 31, 2024. The increase in stockholders’ equity was primarily attributed to the completion of the second step conversion and offering during the third quarter of 2025, as well as $5.3 million in net income earned during the first nine months of 2025.

Comparison of Results of Operations for the Three Months Ended September 30, 2025 and 2024

General. Net income increased to $2.4 million during the three months ended September 30, 2025, or $0.32 per diluted share, an increase of $1.0 million, or 77.1%, compared to net income of $1.3 million, or $0.18 per diluted share, for the three months ended September 30, 2024. Our financial performance for the three months ended September 30, 2025 was positively impacted by a $972,000 increase in net interest income along with an increase in non-interest income.

Net Interest Income. Net interest income for the three months ended September 30, 2025 increased by $972,000, or 18.1%, to $6.4 million as compared to $5.4 million for the three months ended September 30, 2024. Net interest margin and interest rate spread were 3.72% and 3.02%, respectively, for the three months ended September 30, 2025 as compared to 3.28% and 2.67%, respectively, for the three months ended September 30, 2024.

Interest Income. Interest income for the three months ended September 30, 2025 was $9.4 million, an increase of $500,000, or 5.6%, compared to $8.9 million for the three months ended September 30, 2024. The increase in interest income from the prior year quarter was primarily due to an increase in interest earned on loans of $463,000, or 6.0%, as a result of an

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increase in the average yield on loans of 21 basis points and an increase in the average balance of loans of $12.0 million, or 2.2%. The increase in the average yield on loans was primarily attributable to the origination and repricing of loans at higher interest rates since the third quarter of 2024.

Interest Expense. Interest expense for the three months ended September 30, 2025 was $3.0 million, a decrease of $472,000, or 13.6%, from $3.5 million for the three months ended September 30, 2024. The decrease in interest expense when compared to the prior year quarter was primarily due to a 27 basis points decrease in average interest rate paid on interest-bearing liabilities and a $20.8 million, or 4.1%, decrease in the average balance of interest-bearing liabilities. During the three months ended September 30, 2025 as compared to the same period in 2024, interest expense on deposits decreased by $353,000, or 10.6%, due to a 27 basis points decrease in the average interest rate paid on deposit accounts and a $2.6 million, or 0.5%, decrease in the average balance of deposits. The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates, time deposit repricing, and a marginal shift in deposit composition to core deposits. Average interest-bearing deposit balances decreased during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024 due to a decrease in all deposit categories except money market accounts. During the three months ended September 30, 2025, interest expense on borrowed funds and other interest-bearing liabilities decreased by $119,000, or 79.9%, compared to the three months ended September 30, 2024, primarily due to a $18.2 million, or 88.7%, decrease in average borrowed funds and other interest-bearing liabilities outstanding due to the repayment of $8.3 million in borrowed funds during the first nine months of 2025.

Provision (Credit) for Credit Losses. The Company recorded a $269,000 credit to the provision for credit losses for the three months ended September 30, 2025, as compared to a credit to the provision of $229,000 for the three months ended September 30, 2024. The credit to the provision for credit losses of $269,000 for the three months ended September 30, 2025 was primarily attributable to a decrease in the qualitative factors related to current economic conditions within the modeled allowance for credit losses estimate derived as of September 30, 2025.

Non-Interest Income. Non-interest income was $1.1 million for the three months ended September 30, 2025, an increase of $274,000, or 34.6%, as compared to $791,000 for the three months ended September 30, 2024. The increase was primarily due to a $182,000 increase in earnings on bank-owned life insurance as a result of a death benefit, an $83,000 increase in unrealized gain on equity securities, and a $24,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $14,000 decrease in debit card fees.

Non-Interest Expense. Non-interest expense remained relatively consistent at $4.8 million for both the three months ended September 30, 2025 and 2024, increasing $30,000, or 0.6%.

Income Tax Expense. Income tax expense was $487,000 for the three months ended September 30, 2025, an increase of $229,000, or 88.8%, as compared to $258,000 for the three months ended September 30, 2024. The increase in income tax expense from the prior year quarter was due to an increase in pre-tax income earned during the current quarter as well as an increase in the effective tax rate during the third quarter of 2025. The effective tax rate was 17.1% for the three months ended September 30, 2025 as compared to 16.2% for the three months ended September 30, 2024, as a result of an increase in pre-tax, taxable income.

Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024

General. Net income was $5.3 million for the nine months ended September 30, 2025, or $0.70 per diluted share, an increase of $1.9 million, or 54.1%, compared to net income of $3.5 million, or $0.46 per diluted share, for the nine months ended September 30, 2024. Net income for the nine months ended September 30, 2025 was positively impacted by a $2.2 million increase in net interest income along with a decrease in non-interest expenses.

Net Interest Income. Net interest income for the nine months ended September 30, 2025 increased by $2.2 million, or 14.1%, to $17.9 million as compared to $15.7 million for the nine months ended September 30, 2024. Net interest margin and interest rate spread were 3.68% and 3.09%, respectively, for the nine months ended September 30, 2025 as compared to 3.17% and 2.59%, respectively, for the nine months ended September 30, 2024.

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Interest Income. Interest income increased by $610,000, or 2.3%, to $26.8 million for the nine months ended September 30, 2025 when compared to $26.2 million for the nine months ended September 30, 2024. This increase was primarily due to an increase in the interest earned on loans of $1.4 million, or 6.1%, as a result of an increase in the average yield on loans of 33 basis points and an increase in the average balance of loans of $1.4 million. The increase in the average yield on loans was primarily attributable to the origination and repricing of loans at higher interest rates since the third quarter of 2024. This increase in interest income was partially offset by a decrease in interest earned on interest-earning deposits of $665,000 or 33.9%, resulting from a decrease in the average yield on interest-earning deposits of 102 basis points and a decrease in the average balance of interest-earning deposits of $8.9 million, or 17.7%.

Interest Expense. Interest expense decreased $1.6 million, or 15.3%, to $8.9 million for the nine months ended September 30, 2025, compared to $10.5 million for the nine months ended September 30, 2024. The decrease in interest expense was primarily due to a 28 basis points decrease in average interest rate paid on interest-bearing liabilities and a decrease in the average balance of interest-bearing liabilities of $28.4 million, or 5.5%. During the first nine months of 2025, there was a $1.2 million decrease in interest expense on total deposit accounts when compared to the first nine months of 2024 due to a 28 basis points decrease in the average interest rate paid on total deposits along with a decrease in average total deposit balance of $7.4 million, or 1.5%. The decrease in the average interest rate paid on deposit accounts was primarily due to the decrease in market interest rates, time deposit repricing, and a marginal shift in deposit composition to core deposits. Interest expense on borrowed funds and other interest-bearing liabilities also decreased $431,000, or 77.2%, during the first nine months of 2025 when compared to the first nine months of 2024, primarily due to a $21.0 million, or 83.6%, decrease in the average balance of borrowed funds and other interest-bearing liabilities outstanding as we reduced our FHLBNY borrowings.

Provision (Credit) for Credit Losses. The Company recorded a $221,000 credit to the provision for credit losses on loans and unfunded commitments during the nine months ended September 30, 2025, as compared to a credit of $866,000 to the provision for credit losses during the nine months ended September 30, 2024. The decrease in the allowance for credit losses on loans and corresponding credit to the provision for credit losses recognized during the first nine months of 2025 was the result of a decrease in expected loss rates derived from expected quantitative losses inclusive of forecasted economic trends and qualitative considerations including current local economic conditions as of September 30, 2025.

Non-Interest Income. Non-interest income increased by $354,000, or 15.8%, to $2.6 million for the nine months ended September 30, 2025, as compared to $2.2 million for the nine months ended September 30, 2024. The increase was primarily due to a $185,000 increase in earnings on bank owned life insurance as a result of the recognition of a death benefit during the third quarter of 2025, a $182,000 increase in unrealized gain on equity securities, and a $69,000 increase in earnings on annuity assets in connection with the purchase of annuities during the fourth quarter of 2024, partially offset by a $49,000 decrease in service charges and fees and a $31,000 decrease in debit card fees.

Non-Interest Expense. Non-interest expense was $14.3 million for the nine months ended September 30, 2025, a decrease of $360,000, or 2.4%, as compared to $14.7 million for the nine months ended September 30, 2024. The decrease related primarily to a decline in FDIC insurance expense of $469,000, or 67.7%, due to a decrease in premium assessments related to remediating regulatory matters. As a result of management's efforts to decrease the use of external consultants and optimize operating expenses, professional services decreased by $217,000, or 20.0%, and occupancy and equipment expenses decreased by $143,000, or 6.9%. These decreases were partially offset by an increase in salaries and employee benefits of $469,000, or 5.8%, and a $94,000, or 7.0%, increase in data processing primarily due to an increase in costs related to core system maintenance when compared to the prior year period.

Income Taxes Expense. Income tax expense was $1.1 million for the nine months ended September 30, 2025, an increase of $415,000, or 63.2%, as compared to $657,000 for the first nine months of 2024. The increase in income tax expense from the first nine months of 2024 was primarily related to the increase in pre-tax income earned during the first nine months of 2025 and an increase in the effective tax rate during the first nine months of 2025. The effective tax rate was 16.7% for the first nine months of 2025 and 16.0% for the first nine months of 2024, as a result of an increase in pre-tax, taxable income.

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Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise during the ordinary course of business. Liquidity is primarily needed to fund loan commitments, to pay the deposit withdrawal requirements of our customers, as well as to fund current and planned expenditures. Our primary sources of funds consist of deposits, scheduled amortization and prepayments of loans and securities, maturities and sales of investments and loans, excess cash, interest earning deposits at other financial institutions, and funds provided from operations.

We have written agreements with the FHLBNY, which allow us to borrow the maximum lending values designated by the type of collateral pledged. As of September 30, 2025, the maximum amount that we could borrow from the FHLBNY, based on the market value of certain fixed-rate residential, one- to four-family loans pledged to FHLBNY, was $88.6 million, which was collateralized by certain fixed-rate residential, one- to four-family loans. At September 30, 2025, and December 31, 2024, we had outstanding advances under this agreement of $2.0 million and $10.3 million, respectively. As of September 30, 2025, we had available borrowing capacity of $86.6 million under the aforementioned agreement with the FHLBNY.

We have a written agreement with the Federal Reserve Bank discount window for overnight borrowings which is collateralized by a pledge of our securities, and allows us to borrow up to the value of the securities pledged. At September 30, 2025, and December 31, 2024, there were no securities pledged to the Federal Reserve Bank and we had no balances outstanding. Additionally, as of September 30, 2025, the Bank has uncollateralized intraday credit with the Federal Reserve Bank that allows for certain transactions to not be rejected for which there are insufficient funds in our Federal Reserve Master Account during normal hours of operation.

Lastly, we have also established an unsecured line of credit with a correspondent bank for $20.0 million. There were no borrowings on this line as of September 30, 2025 and December 31, 2024.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, calls of investment securities, and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions, and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.

Our primary investing activities include the origination of loans and the purchase of investment securities. For the nine months ended September 30, 2025, we originated loans of approximately $56.9 million as compared to approximately $42.8 million of loans originated during the nine months ended September 30, 2024. Loan originations exceeded principal repayments and other deductions during the nine months ended September 30, 2025 by $8.1 million. The Company did not make any purchases of investment securities or sell any investment securities during the nine months ended September 30, 2025.

We have loan commitments to borrowers and borrowers have unused overdraft lines of protection, unused home equity lines of credit, and unused commercial lines of credit that may require funding at a future date. We believe we have sufficient funds to fulfill these commitments, including sources of funds available through the use of FHLBNY advances or other liquidity sources. Total deposits were $590.3 million at September 30, 2025 as compared to $573.0 million at December 31, 2024. Approximately $188.4 million of time deposit accounts are scheduled to mature within one year as of September 30, 2025. Based on our deposit retention experience, current pricing strategy, and competitive pricing policies, we anticipate that a significant portion of these time deposits will remain with us following their maturity.

We are committed to maintaining a strong liquidity position; therefore, we monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. The marginal cost of new funding, however, whether from deposits or borrowings from the FHLBNY, will be carefully considered as we monitor our liquidity needs. Therefore, in order to maintain sufficient liquidity and manage our cost of funds, we may consider wholesale funding options, including additional borrowings from the FHLBNY, in the future.

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We do not anticipate any material capital expenditures in 2025. We do not have any balloon or other payments due on any long-term obligations, other than the borrowing agreements noted above. At September 30, 2025, the Bank exceeded all of its regulatory capital requirements.

Regulatory Capital

The federal banking agencies have developed a “Community Bank Leverage Ratio” ("CBLR") (bank’s tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion and limited amounts of off-balance-sheet exposures and trading assets and liabilities. A “qualifying community bank” may elect to utilize the Community Bank Leverage Ratio in lieu of the general applicable risk-based capital requirements under Basel III. If the community bank exceeds this ratio it will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Basel III. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies set the minimum capital for the Community Bank Leverage Ratio at 9.0%. The Bank elected to be subject to this new definition when it became effective on January 1, 2020, and has continued to use the Community Bank Leverage Ratio since that time. As of September 30, 2025 and December 31, 2024, the Bank’s Community Bank Leverage Ratio was 16.34% and 13.83%, respectively.

In order to be considered “well-capitalized” by the FDIC, a non-CBLR bank must maintain a Tier 1 Leverage capital ratio of 5% and a Total Risk-Based capital ratio of 10%. At September 30, 2025 and December 31, 2024, the Bank’s Tier 1 Leverage capital ratio was 16.34% and 13.83%, respectively, and its Total Risk-Based capital ratio was 22.76% and 18.79%, respectively. Accordingly, the Bank was considered to be well-capitalized under applicable regulatory capital requirements.

Off-Balance Sheet Arrangements

Other than loan commitments, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. Refer to Note 7 in the Notes to our unaudited consolidated financial statements for a summary of loan commitments outstanding as of September 30, 2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Disclosure is not required as the Company is a smaller reporting company.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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PART II

Item 1A. Risk Factors.

Refer to Part I, Item 1A, Risk Factors, of our Form 10-K for the year ended December 31, 2024 and Forward-Looking Statements from Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q for a discussion of certain risks affecting us. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations.

There have been no material changes to the risk factors since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table reports information regarding repurchases by Lake Shore Bancorp of its common stock in each month of the quarter ended September 30, 2025. The Company’s stock repurchase program was terminated effective July 18, 2025 in connection with the consummation of the conversion of Lake Shore, MHC from mutual-to-stock form. Share amounts disclosed herein related to periods prior to the date of conversion (July 18, 2025) have been adjusted to give the retroactive recognition to the exchange ratio applied in the conversion (1.3549).

COMPANY PURCHASES OF EQUITY SECURITIES

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)(2)

July 1 through July 31, 2025

—

$

—

—

—

August 1 through August 31, 2025

—

—

—

—

September 1 through September 30, 2025

—

—

—

—

Total

—

$

—

—

—

(1) On August 13, 2021, our Board of Directors adopted a stock repurchase program. The stock repurchase program authorized the Company to repurchase up to an aggregate of 144,062 shares, or approximately 5% of its outstanding shares, excluding the shares held by Lake Shore, MHC. The Company’s stock repurchase program was terminated effective July 18, 2025 in connection with the consummation of the conversion of Lake Shore, MHC from mutual-to-stock form.

(2) On October 22, 2025, our Board of Directors adopted a plan to repurchase up to 5% of our outstanding shares of common stock. Repurchases under the plan are expected to commence following the one-year anniversary of the recently completed conversion of Lake Shore, MHC from mutual-to-stock form, or on July 20, 2026.

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Item 5. Other Information

During the third quarter of 2025, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

Item 6. Exhibits

			31.1				Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
			31.2				Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002*
			32.1				Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
			32.2				Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
			101.INS				Inline XBRL Instance Document*
			101.SCH				Inline XBRL Taxonomy Extension Schema Document*
			101.CAL				Inline XBRL Taxonomy Calculation Linkbase Document*
			101.DEF				Inline XBRL Taxonomy Extension Definition Linkbase Document*
			101.LAB				Inline XBRL Taxonomy Label Linkbase Document*
			101.PRE				Inline XBRL Taxonomy Presentation Linkbase Document*
			104				Cover Page Interactive Date File (formatted as inline XBRL and contained in Exhibit 101)*

________________

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		LAKE SHORE BANCORP, INC.
		(Registrant)
November 12, 2025	By:	/s/ Kim C. Liddell
		Kim C. Liddell
		President and Chief Executive Officer
		(Principal Executive Officer)
November 12, 2025	By:	/s/ Taylor M. Gilden
		Taylor M. Gilden
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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FAQ

What were LSBK’s Q3 2025 earnings?

Net income was $2,359 thousand, up from $1,332 thousand a year ago. Basic and diluted EPS were $0.32.

How did net interest income and expenses change for LSBK?

Q3 2025 net interest income was $6,355 thousand. Total interest expense was $2,996 thousand.

What is LSBK’s current balance sheet size and deposits?

Total assets were $742,802 thousand and total deposits were $590,345 thousand as of September 30, 2025.

What capital actions occurred in the second-step conversion?

LSBK sold 4,950,460 shares at $10.00, raising $49.5 million gross; offering costs were about $2.3 million, and the ESOP purchased $4.0 million of shares.

How many LSBK shares are outstanding?

There were 7,825,501 shares outstanding as of November 6, 2025.

Did LSBK declare a dividend?

Yes. A $0.09 per‑share cash dividend was declared on October 22, 2025.

Is there a share repurchase plan?

Yes. The board adopted a plan to repurchase up to 5% of outstanding shares, which may begin after July 20, 2026.