Lake Shore Bancorp 8K Annual Meeting of Shareholders | LSBK 20 May 09

Lake Shore Bancorp, Inc.

Annual Meeting of Shareholders

May 20, 2009

Exhibit 99.1

Lake Shore Bancorp, Inc.

Safe

Harbor

Statement

This presentation includes "forward looking statements" within the meaning of the

Private Securities Litigation Reform Act of 1995. Such statements include, but are

not limited to, statements concerning future business, revenue and earnings. These

statements are not historical facts or guarantees of future performance, events or

results. There are risks, uncertainties and other factors that could cause the actual

results of the Company to differ materially from the results expressed or implied by

such forward-looking statements. Information on factors that could affect the

Company's business and results is discussed in the Company's periodic reports filed

with the Securities and Exchange Commission. Forward looking statements speak

only as of the date they are made. The Company undertakes no obligation to publicly

update or revise forward looking information, whether as a result of new, updated

information, future events or otherwise.

Lake Shore Bancorp, Inc.

Lake Shore Bancorp Inc.

Corporate Profile

Market Data (as of May 18, 2009) –

(Source -

NASDAQ)

Ticker Symbol

LSBK

52 –

Week Range

$4.31 -

$10.18

Current Price

$7.20

Market Capitalization

$44.72 million

Shares Outstanding

6.21M shares

50 Day Avg. Trading Vol.

2,288 shares

Dividend

Yield

2.78%

Ownership

–

Insider (including MHC, directors

and executives)

–

Institutional

–

Other

Other Data

Return on Average Equity

2.99%

(as of March 31, 2009)

63.08%

13.90%

23.02%

Lake Shore Bancorp, Inc.

Lake Shore Savings Facts:

We were established in 1891 and have provided

over 118 years of service as a community bank.

We continue to provide loan services to the

communities we serve. We have the funds

available to provide residential mortgage loans and

commercial loans to consumers and small

business owners.

Lake Shore Savings is well capitalized. We do not

need government assistance.

Lake Shore Bancorp, Inc.

Lake

Shore

Savings

Facts

(cont’d.)

We continue to have strong earnings. Our net

interest income has been growing.

We have maintained a steady dividend payment of

$0.05 per share, despite economic news and lower

interest rates on loans.

Branches in Erie County continue to show great

potential and growth opportunities for Lake Shore

Savings.

We take great pride in our employees and continue

to add talented people to our staff.

Lake Shore Bancorp, Inc.

Challenges

2009

Lowest mortgage rates in the last 30 years.

Loan refinancing is at an all-time high.

Large number of applications for residential mortgage

loans have been received in 2009, due to lower

interest rates.

Lower interest rate yields will result in lower earnings.

Holding low rate residential mortgages in our loan

portfolio is considered risky.

Low rate residential mortgage loans will be sold in

the secondary loan market to reduce risk.

Lake Shore Bancorp, Inc.

Challenges

2009

(cont’d.)

Wait out the storm until rates get to a level where we

can again hold loans in our own portfolio.

Increase our small business lending in Erie and

Chautauqua County. We added two new members to

our commercial lending staff. George Gardner in Erie

County and Lou Drago in Chautauqua County. Both

employees are seasoned lenders with over 20 years of

experience.

Continue to underwrite all loans using the high

standards that have made Lake Shore successful over

the years.

Lake Shore Bancorp, Inc.

Goals

for

2009

Increase our SBA lending for small business

loans.

Review new technology to provide the best

services available to our customers.

Continue to grow our deposit and loans in Erie

and Chautauqua Counties.

Identify and add two new branches in Erie

County by the 3

quarter of 2011.

Lake Shore Bancorp, Inc.

Goals

for

2009

(cont’d.)

Develop a long term Strategic Plan for the future.

Continue

improve

our

“Branding”

Erie

County.

Continue to create value for our shareholders.

Provide a fair return on investment for our

shareholders.

Lake Shore Bancorp, Inc.

•

Financial Presentation

–

Rachel Foley, CFO

Lake Shore Bancorp, Inc.

Total Assets

($ in millions)

$329.8

$333.7

$354.2

$357.8

$407.8

$414.1

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

2004

2005

2006

2007

2008

Q1 2009

Lake Shore Bancorp, Inc.

Loans, net

($ in millions)

$248.2

$240.5

$218.7

$205.7

$206.2

$199.5

$100.0

$150.0

$200.0

$250.0

$300.0

2004

2005

2006

2007

2008

Q1 2009

Lake Shore Bancorp, Inc.

Loan Composition

(as of December 31, 2008)

Commercial

real estate

8.14%

Construction

loans

2.70%

Commercial

loans

3.09%

One-to-four

family

73.35%

Consumer

loans

0.98%

Home equity

11.74%

Lake Shore Bancorp, Inc.

Non-performing Loans as a

percentage of Gross Loans

0.40%

0.66%

0.64%

0.75%

0.69%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

2004

2005

2006

2007

2008

Lake Shore Bancorp, Inc.

Loan Loss Reserves as a

percentage of Loans

0.65%

0.60%

0.61%

0.56%

0.61%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

2004

2005

2006

2007

2008

Lake Shore Bancorp, Inc.

Total Deposits

($ in millions)

$300.7

$243.6

$250.9

$249.6

$293.2

$240.8

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

2004

2005

2006

2007

2008

2009

Lake Shore Bancorp, Inc.

Deposit Composition

(as of December 31, 2008)

Time

Deposits <

$100,000

46.37%

Savings

9.31%

Money

Market

Accts

8.58%

Interest-

Bearing

Demand

12.04%

Time

Deposits >

$100,000

14.90%

Lake Shore Bancorp, Inc.

Regulatory Capital Requirements

Lake Shore Bancorp, Inc.

Net Interest Income

($ in millions)

$9.4

$9.5

$9.7

$9.5

$11.2

$5.0

$10.0

$15.0

2004

2005

2006

2007

2008

Lake Shore Bancorp, Inc.

Treasury Yield

0.52

3.19

1.25

1.5

1.72

1.97

2.47

2.64

3.18

3.48

3.89

4.57

0.14

0.19

0.33

0.94

1.4

2.03

2.7

4.11

4.06

1 mo

3 mo

6 mo

1 yr

2 yr

3 yr

5 yr

7 yr

10 yr

20 yr

30 yr

Treasury Maturities

5/2/2008

5/4/2009

Lake Shore Bancorp, Inc.

Interest Rate Margin & Spread

(in percentages)

3.15

3.09

3.00

2.92

3.19

2.97

3.03

2.93

2.60

2.42

2.75

2.61

0.00

1.00

2.00

3.00

4.00

5.00

2004

2005

2006

2007

2008

Q1 2009

Net Interest Margin

Interest Rate Spread

Lake Shore Bancorp, Inc.

Net Income

($ in millions)

$2.2

$2.1

$1.8

$1.5

$0.5

$1.0

$1.5

$2.0

$2.5

2004

2005

2006

2007

2008

Lake Shore Bancorp, Inc.

Return on Average Assets

(in percentages)

0.68%

0.62%

0.52%

0.39%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

1.00%

2004

2005

2006

2007

2008

Lake Shore Bancorp, Inc.

Investment Impairment

•

Due to disruptions in the security & housing

markets during 2008, some of our investments

experienced a severe decline in market value.

As a result, we recorded a pre-tax impairment

loss of $1.9 million ($1.2 million net of tax) on

the value of our investment portfolio in 2008.

•

If the impairment had not been taken, our net

income for 2008 would have been $2.7 million,

an increase of

$839,000, or 46.2%, over 2007

results.

Lake Shore Bancorp, Inc.

Interest Rate Floor

•

Purchased August 2006.

•

Cost $221,000.

•

Covers

$10

Million

“notional”

amount

variable

rate loans tied to prime rate.

•

Receive interest income if prime rate falls below

8%.

•

Prime rate fell below 8% in September 2007.

•

$346,180 interest income received through

January 30, 2009.

Lake Shore Bancorp, Inc.

Interest Rate Floor (cont’d.)

•

Floor product is a derivative.

•

Increase or decrease in fair market value is recorded as

interest income.

•

Fair market value increased in 2007 and 2008 due to

falling interest rates.

•

Since inception, we recorded $669,000 in gains in the

fair value of this asset.

•

We sold the floor on January 30, 2009. Management

determined that the value of the product had reached its

peak, based on an evaluation of estimated prime rate

changes in the future.

•

Total cash flow received on the investment, net of cost,

was $1,015,180 over the last 2.5 years, resulting in an

internal rate of return of 79.3%.

Lake Shore Bancorp, Inc.

Quarter

2009

Results

Total

Assets up $6.2M since Dec. 31

–

Loans, net up $7.7M.

Total

Deposits up $7.4M since Dec. 31

Increases

primarily due to the new branch

office that opened in Kenmore, NY on

December 1, 2008, and due to low interest

rates being offered on residential

mortgage loans.

Lake Shore Bancorp, Inc.

Quarter 2009 vs. 1

Quarter 2008

Results

•

$405,000 net income compared to

$658,000 in 1

quarter of 2008, a 38.4%

decrease.

–

$302,000 decrease in interest income due to

fair value and interest income on interest rate

floor being $43,000 prior to sale on January

30, 2009, versus a $345,000 increase on floor

product in 1

Q of 2008.

–

$198,000 decrease in interest expense due to

lower interest rates in 2009.

Lake Shore Bancorp, Inc.

Dividends Paid per Share

$0.03

$0.04

$0.05

$0.01

$0.02

$0.03

$0.04

$0.05

$0.06

2006

2007

2008

2009

Lake Shore Bancorp (LSBK) 8-KAnnual Meeting of Shareholders