GLK Great Lakes Bancorp New

BUFFALO, New York, Nov. 2 /PRNewswire-FirstCall/ -- Great Lakes Bancorp, Inc. (NYSE:GLK), the bank holding company of Greater Buffalo Savings Bank, today announced net losses for the third quarter and nine months ended September 30, 2007 of $1.7 million ($0.16 per share) and $2.6 million ($0.23 per share), respectively. This compares to net losses of $9 thousand ($0.00 per share) for the third quarter of 2006 and $143 thousand ($0.02 per share) for the first nine months of 2006. The higher net loss for the current quarter as compared to the third quarter of 2006 reflects a decrease in net interest income and higher loan loss provisions and operating costs, offset in part by an increase in noninterest income. The higher net loss for the first nine months of 2007 as compared to the 2006 period reflects higher operating costs, offset in part by increases in net interest income and noninterest income and reductions in loan loss provisions. Operating results for the third quarter and nine months ended September 30, 2007 were impacted by the Company's decision in early September to exit its mortgage banking activities in Buffalo and Long Island. The Company's mortgage banking activities consisted principally of originating residential mortgage loans for sale in the ordinary course of business to third-party investors. The Company's exit decision resulted in the severance of 31 employees engaged in mortgage origination activities and the resignation of two mortgage banking executives. The Company recorded a pre-tax charge of $805 thousand in the third quarter reflecting the full cost of this exit decision. The charge was comprised principally of employee severance and related costs ($601 thousand) and leased facility costs associated with two mortgage origination offices in Long Island that are no longer occupied ($184 thousand). The Company's third quarter results were also impacted by the pending merger with First Niagara Financial Group, Inc. announced on September 10, 2007. The Company recognized a charge for professional fees relating to the merger of $192 thousand incurred in the third quarter and $380 thousand of expenses relating to 2007 employee incentive awards and contributions to the Company's 401(k) plan that were approved as part of the merger transaction. As to the Company's core operations, net interest income decreased $222 thousand, or 5.6%, to $3.8 million for the current quarter compared to the third quarter of 2006. Interest income increased $282 thousand in the current quarter, as average loan balances increased $60.5 million, or 12.4%, to $550.2 million. Interest expense increased $504 thousand in the current quarter compared with the 2006 quarter. Average interest-bearing liabilities increased $12.2 million comparing the two quarters and average rates paid on these liabilities increased from 3.99% to 4.20%. Net interest margin declined to 1.92% in the current quarter from 2.03% in the 2006 quarter. Provisions for loan losses of $376 thousand recognized in the current quarter were up by $347 thousand from $29 thousand for the third quarter of 2006. The current quarter provision resulted principally from increases in loan volumes. Noninterest income increased by $555 thousand, or 95%, to $1.1 million for the current quarter compared with the third quarter of 2006. Noninterest expense increased by $2.7 million, or 58.3%, to $7.3 million for the current quarter compared with the third quarter of 2006, including the costs of exiting mortgage banking activities and costs associated with the First Niagara merger. Excluding these one-time costs, operating expenses increased across most categories, with employee and occupancy costs representing the largest increases as the Company completed its retail branch network and made significant additions to its workforce during 2007. Results for the first nine months of 2007 reflected increases in net interest income and noninterest income and reductions in loan loss provisions; all offset by higher operating expenses. Net interest income was up $140 thousand to $11.5 million as compared with the first nine months of 2006. Loan loss provisions of $263 thousand for the first nine months of 2007 represented a decrease of $324 thousand from the first nine months of 2006. The current year provision resulted from increases in loan volumes, partially offset by reductions in formula-based reserve factors and specific reserves on commercial credits recognized during the first half of 2007. Noninterest income increased $1.2 million. Noninterest expense was up by $5.2 million in the first nine months of 2007 as compared to the 2006 period. At September 30, 2007, the Company had total assets of $903.7 thousand compared to $869.3 million at September 30, 2006. About Great Lakes Bancorp Great Lakes Bancorp, Inc. is the bank holding company of Greater Buffalo Savings Bank, a Buffalo-based, full-service community bank that serves residents and businesses located throughout Western New York. The Bank has 16 full-service offices in operation. On September 9, 2007, the Company and First Niagara Financial Group, Inc. entered into a definitive Merger Agreement whereby the Company will merge into First Niagara. Shareholders of the Company will receive cash, First Niagara stock, or a combination of cash and First Niagara stock in return for their shares of Company stock. The transaction is expected to close in February 2008 subject to the approval of the Company's shareholders and the receipt of regulatory approvals. More information about Greater Buffalo Savings Bank can be found on the Internet at http://www.gbsb.com/. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on current plans and expectations, which are subject to a number of risk factors and uncertainties that could cause future results to differ materially from historical performance or future expectations. These differences may be the result of various factors, including changes in general, national or regional economic conditions, changes in loan default and charge-off rates, reductions in deposit levels necessitating increased borrowing to fund loans and investments, changes in interest rates, changes in levels of income and expense in noninterest income and expense related activities, competition, and other risk factors. For further information on these risk factors and uncertainties, please see Great Lakes Bancorp's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2006. Great Lakes Bancorp undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or other changes. GREAT LAKES BANCORP, INC. Summary of Quarterly Financial Data Nine months ended September 30, 2007 2006 SELECTED INCOME STATEMENT DATA (Dollar amounts in thousands) Interest income $33,962 31,889 Interest expense 22,478 20,545 Net interest income 11,484 11,344 Provision (credit) for loan losses 263 587 Net interest income after provision (credit) for loan losses 11,221 10,757 Noninterest income: Gain on sale of mortgage loans 699 - Service charges on deposit accounts 623 480 Other fees and service charges 539 379 Loan fee income 479 247 Earnings on bank-owned life insurance 367 348 Other operating income 108 132 Total noninterest income 2,815 1,586 Noninterest expense: Salaries and employee benefits 10,883 7,620 Occupancy, equipment and furnishings 2,449 1,782 Data processing and operations 865 690 Professional services 793 457 Deposit and other insurance 612 185 Printing, postage and supplies 387 332 Advertising 379 592 Other operating expenses 1,788 1,300 Total noninterest expense 18,156 12,958 Loss before income taxes (4,120) (615) Income tax benefit (1,557) (472) Net loss $(2,563) (143) SELECTED OPERATING DATA Net loss per share - basic and diluted $(0.23) (0.02) Net loss (annualized): Return on average assets (0.38)% (0.02) Return on average equity (2.54)% (0.21) Efficiency ratio 125.5% 98.7 FTE personnel - end of period 234 234 Number of branches - end of period 16 14 Stock price (NYSE:GLK): High $14.74 20.98 Low $11.54 14.05 Close $13.45 16.07 Quarterly Trends 2007 2006 Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter SELECTED INCOME STATEMENT DATA (Dollar amounts in thousands) Interest income 11,419 11,431 11,112 10,840 11,137 Interest expense 7,645 7,493 7,340 7,049 7,141 Net interest income 3,774 3,938 3,772 3,791 3,996 Provision (credit) for loan losses 376 (380) 267 443 29 Net interest income after provision (credit) for loan losses 3,398 4,318 3,505 3,348 3,967 Noninterest income: Gain on sale of mortgage loans 374 263 62 16 - Service charges on deposit accounts 233 214 176 174 184 Other fees and service charges 195 185 159 156 137 Loan fee income 177 182 120 91 88 Earnings on bank-owned life insurance 124 122 121 121 117 Other operating income 36 36 36 42 58 Total noninterest income 1,139 1,002 674 600 584 Noninterest expense: Salaries and employee benefits 4,509 3,332 3,042 3,067 2,716 Occupancy, equipment and furnishings 971 746 732 690 630 Data processing and operations 298 299 268 272 240 Professional services 418 171 204 269 167 Deposit and other insurance 222 215 175 79 94 Printing, postage and supplies 119 159 109 109 123 Advertising 106 139 134 113 202 Other operating expenses 673 618 497 558 450 Total noninterest expense 7,316 5,679 5,161 5,157 4,622 Loss before income taxes (2,779) (359) (982) (1,209) (71) Income tax benefit (1,079) (89) (389) (456) (62) Net loss (1,700) (270) (593) (753) (9) SELECTED OPERATING DATA Net loss per share - basic and diluted (0.16) (0.02) (0.05) (0.07) 0.00 Net loss (annualized): Return on average assets (0.75) (0.12) (0.27) (0.34) 0.00 Return on average equity (5.04) (0.80) (1.77) (2.19) (0.03) Efficiency ratio 146.9 113.4 114.3 115.7 99.5 FTE personnel - end of period 234 260 245 239 234 Number of branches - end of period 16 15 15 14 14 Stock price (NYSE:GLK): High 13.73 14.74 14.69 16.63 17.45 Low 11.54 11.77 11.90 13.82 14.05 Close 13.45 13.21 12.00 14.04 16.07 GREAT LAKES BANCORP, INC. Summary of Quarterly Financial Data (continued) 2007 September 30, June 30, March 31, SELECTED BALANCE SHEET DATA (Dollar amounts in thousands) Cash: Cash and cash equivalents $12,799 14,210 15,549 Restricted cash 3,897 3,875 3,851 Total cash 16,696 18,085 19,400 Investment securities: Available for sale 207,698 216,541 226,808 Held-to-maturity 15,973 15,981 15,989 Total investment securities 223,671 232,522 242,797 Loans: Real estate loans: Residential 245,148 252,240 253,626 Home equity 60,449 56,664 53,337 Commercial 86,927 87,622 89,706 Construction 33,822 19,904 30,066 Commercial and industrial 67,682 63,044 62,530 Automobile loans 55,139 49,315 46,151 Other consumer loans 1,377 1,106 765 Total loans 550,544 529,895 536,181 Allowance for loan losses (2,953) (2,978) (3,950) Deferred loan costs, net 6,581 6,750 6,707 Total loans, net 554,172 533,667 538,938 Net deferred tax asset (1) 58,139 56,950 56,221 Goodwill (1) 244 33 19 Total assets 903,747 891,973 904,829 Total interest-earning assets 793,108 782,185 796,321 Deposits: Noninterest-bearing checking 32,188 32,151 28,522 Interest-bearing checking 44,435 46,647 47,788 Savings and money market 194,998 216,848 217,668 Total core deposits 271,621 295,646 293,978 Certificates of deposit 372,381 350,397 342,903 Total deposits 644,002 646,043 636,881 Short-term borrowings 15,801 9,114 25,787 Long-term borrowings 100,372 91,372 96,372 Total interest-bearing liabilities 727,987 714,378 730,518 Net interest-earning assets 65,121 67,807 65,803 Shareholders' equity 131,493 134,330 135,623 Tangible shareholders' equity (2) 131,249 134,297 135,604 Securities available for sale - fair value adjustment included in shareholders' equity $(2,792) (2,834) (1,789) Common shares outstanding 10,826,198 10,925,218 10,921,796 2006 December 31, September 30, SELECTED BALANCE SHEET DATA (Dollar amounts in thousands) Cash: Cash and cash equivalents 14,026 13,305 Restricted cash 3,923 3,900 Total cash 17,949 17,205 Investment securities: Available for sale 233,853 242,360 Held-to-maturity 15,997 16,004 Total investment securities 249,850 258,364 Loans: Real estate loans: Residential 253,709 247,135 Home equity 53,676 53,235 Commercial 78,666 69,878 Construction 25,481 23,543 Commercial and industrial 55,055 53,791 Automobile loans 43,719 43,284 Other consumer loans 659 769 Total loans 510,965 491,635 Allowance for loan losses (3,781) (3,375) Deferred loan costs, net 6,744 6,761 Total loans, net 513,928 495,021 Net deferred tax asset (1) 43,106 42,160 Goodwill (1) 12,832 12,271 Total assets 884,412 869,341 Total interest-earning assets 778,617 766,067 Deposits: Noninterest-bearing checking 37,145 29,022 Interest-bearing checking 45,139 43,443 Savings and money market 214,454 230,037 Total core deposits 296,738 302,502 Certificates of deposit 337,918 354,018 Total deposits 634,656 656,520 Short-term borrowings 17,900 9,539 Long-term borrowings 86,372 56,372 Total interest-bearing liabilities 701,783 693,409 Net interest-earning assets 76,834 72,658 Shareholders' equity 135,510 136,208 Tangible shareholders' equity (2) 122,678 123,937 Securities available for sale - fair value adjustment included in shareholders' equity (2,437) (2,432) Common shares outstanding 10,921,796 10,915,274 (1) Includes $13.0 million that was reclassified from goodwill to deferred tax assets upon the adoption of FIN 48 in the first quarter of 2007. (2) Reflects goodwill recognized in connection with the Bay View merger. GREAT LAKES BANCORP, INC. Summary of Quarterly Financial Data (continued) 2007 2006 September June March December September 30, 30, 31, 31, 30, CAPITAL RATIOS Tier 1 risk-based capital 17.2% 18.8 18.8 20.0 21.6 Total risk based capital 17.7% 19.4 19.6 20.8 22.3 Tier 1 (core) capital 10.6% 11.2 11.3 11.6 11.6 Equity to assets 14.5% 15.1 15.0 15.3 15.7 Tangible shareholders' equity to tangible assets (1) 14.5% 15.1 15.0 14.1 14.5 Shareholders' equity per share $12.15 12.30 12.42 12.41 12.48 Tangible shareholders' equity per share (1) $12.12 12.29 12.42 11.23 11.35 ASSET QUALITY DATA (Dollar amounts in thousands) Nonaccrual loans $974 1,481 3,688 3,548 1,186 Accruing loans past due 90 days or more (2) 2,369 210 - - - Total non-performing loans 3,343 1,691 3,688 3,548 1,186 Foreclosed assets 70 1,018 77 91 82 Total non-performing assets $3,413 2,709 3,765 3,639 1,268 Provision (credit) for loan losses $376 (380) 267 443 29 Net loan charge-offs $(401) (592) (98) (37) (24) Net charge-offs to average loans 0.29% 0.44 0.08 0.03 0.02 Total non-performing loans to total loans 0.60% 0.32 0.68 0.69 0.24 Total non-performing assets to total assets 0.38% 0.30 0.42 0.41 0.15 Allowance for loan losses to total loans 0.53% 0.55 0.73 0.73 0.68 Allowance for loan losses to non-performing loans 88.34% 176.13 107.11 106.58 284.62 (1) Reflects goodwill recognized in connection with the Bay View merger. (2) Includes a $2.1 million commercial mortgage loan for which principal and interest is fully guaranteed by the U.S. Department of Agriculture. GREAT LAKES BANCORP, INC. Summary of Quarterly Financial Data (continued) Nine months ended September 30, 2007 2006 SELECTED AVERAGE BALANCES (Dollar amounts in thousands) Taxable securities $226,757 252,842 Tax-exempt securities 15,131 15,165 Commercial loans: Commercial real estate 108,988 74,978 Commercial and industrial 62,160 45,308 Consumer loans: Residential mortgages 256,475 238,585 Home equity 54,530 51,229 Automobile 48,331 41,415 Other 1,384 551 Loans 538,664 458,707 Total interest-earning assets 788,824 781,198 Allowance for loan losses (3,538) (3,146) Noninterest-earning assets 109,164 74,245 Total assets 894,450 852,297 Interest-bearing liabilities: Interest-bearing checking 44,699 42,241 Savings 84,667 116,567 Money market 126,729 132,852 Certificates of deposit 353,258 324,072 Borrowings 110,418 107,102 Total interest-bearing liabilities 719,771 722,834 Noninterest-bearing checking 28,947 27,100 Total liabilities 759,386 761,587 Stockholders' equity 135,064 90,710 Net earning assets $69,053 58,634 Weighted average common shares outstanding - basic and diluted 10,909,761 8,007,137 Average loans to average deposits 84.4% 71.4 Average loans to average assets 60.2% 53.8 SELECTED AVERAGE YIELDS/RATES Total investment securities 5.05% 4.95 Loans 6.15% 5.87 Total interest-earning assets 5.79% 5.49 Interest-bearing checking 1.20% 1.44 Savings 2.17% 2.28 Money market 3.91% 3.88 Certificates of deposit 4.75% 4.25 Borrowings 5.37% 4.93 Total interest-bearing liabilities 4.18% 3.80 Net interest rate spread 1.61% 1.69 Contribution of interest-free funds 0.37% 0.29 Net interest rate margin 1.98% 1.98 Quarterly Trends 2007 2006 Third Second First Fourth Third Quarter Quarter Quarter Quarter Quarter (Dollar amounts in thousands) Taxable securities 217,842 227,097 235,525 243,864 252,513 Tax-exempt securities 15,122 15,131 15,140 15,148 15,157 Commercial loans: Commercial real estate 110,984 110,708 105,208 91,778 85,811 Commercial and industrial 65,410 63,013 57,977 54,367 53,361 Consumer loans: Residential mortgages 254,545 258,192 256,711 254,557 246,749 Home equity 57,691 52,656 53,196 54,263 53,131 Automobile 53,025 47,145 44,731 43,223 43,285 Other 1,653 1,664 825 852 604 Loans 550,205 540,127 525,386 505,882 489,694 Total interest-earning assets 792,046 790,547 783,788 770,806 793,263 Allowance for loan losses (3,096) (3,631) (3,896) (3,418) (3,319) Noninterest-earning assets 110,143 108,536 108,797 105,386 102,631 Total assets 899,093 895,452 888,689 872,774 892,575 Interest-bearing liabilities: Interest-bearing checking 46,505 44,711 42,840 42,105 40,916 Savings 81,639 84,029 88,408 91,926 98,476 Money market 117,929 135,010 127,352 137,413 141,166 Certificates of deposit 374,111 346,116 339,162 344,353 349,826 Borrowings 102,581 110,832 118,010 76,722 80,222 Total interest- bearing liabilities 722,765 720,698 715,772 692,519 710,606 Noninterest-bearing checking 30,999 28,767 27,032 33,478 30,606 Total liabilities 765,188 759,905 752,928 736,434 757,589 Stockholders' equity 133,905 135,547 135,761 136,340 134,986 Net earning assets 69,281 69,849 68,016 78,287 82,657 Weighted average common shares outstanding - basic and diluted 10,883,784 10,923,665 10,921,796 10,921,583 10,914,896 Average loans to average deposits 84.5 84.6 84.1 77.9 74.1 Average loans to average assets 61.2 60.3 59.1 58.0 54.9 Total investment securities 5.05 5.05 5.04 5.01 4.98 Loans 6.09 6.20 6.15 5.96 5.99 Total interest-earning assets 5.75 5.83 5.78 5.61 5.60 Interest-bearing checking 1.18 1.19 1.22 1.19 1.28 Savings 2.16 2.16 2.18 2.22 2.24 Money market 3.91 3.92 3.91 3.91 3.92 Certificates of deposit 4.81 4.74 4.71 4.60 4.46 Borrowings 5.30 5.40 5.40 5.48 5.58 Total interest-bearing liabilities 4.20 4.17 4.16 4.04 3.99 Net interest rate spread 1.55 1.66 1.62 1.57 1.61 Contribution of interest-free funds 0.37 0.37 0.37 0.42 0.42 Net interest rate margin 1.92 2.03 1.99 1.99 2.03 DATASOURCE: Great Lakes Bancorp, Inc. CONTACT: Andrew W. Dorn, Jr., President and Chief Executive Officer, +1-716-961-1920, or Michael J. Rogers, Executive Vice President and Chief Financial Officer, +1-716-961-1980 Web site: http://www.gbsb.com/

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