Great Lakes Bancorp Announces 2007 Third Quarter Results

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,

[phone], or Michael J. Rogers, Executive Vice President and Chief

Financial Officer, [phone]



Web site:  http://www.gbsb.com/ 

Copyright