SOURCE: Pathfinder Bancorp, Inc.

February 11, 2010 17:27 ET

Pathfinder Bancorp, Inc. Announces Fourth Quarter and Year-End Earnings

OSWEGO, NY--(Marketwire - February 11, 2010) - Pathfinder Bancorp, Inc., the mid-tier holding company of Pathfinder Bank (NASDAQ: PBHC) (listing: PathBcp), announced reported net income of $1.6 million or $0.61 per basic and diluted share for the twelve months ended December 31, 2009, compared to $368,000, or $0.15 per basic and diluted share, for the same period in 2008. For the three months ended December 31, 2009, the Company reported net income of $438,000, or $0.15 per diluted share, compared to $574,000, or $0.23 per diluted share for the same period in 2008.

"We are pleased with our results for 2009, particularly given the continued challenges of the national and regional economies," stated Thomas W. Schneider, President and CEO. "Assets, loans, deposits and equity have all grown to record levels while annual net income of $1.6 million produced earnings per share of $0.61 and a return on average equity of 7.04%."

"Earnings have grown on an expanded net interest margin supported by continued balance sheet diversification and a steep, positive yield curve. Expense increases were primarily attributable to significantly higher FDIC assessments and pension expense valuations," Schneider added.

"Strong deposit growth of 10% helped support loan growth of 5% and a 31% reduction in borrowings," Schneider continued. "Asset quality has remained stable with non-performing assets at 0.67% of total assets. Loan loss reserves grew by 25% to over $3 million and 1.17% of total loans."

Net interest income for the year ended December 31, 2009 increased $1.1 million, or 10.3%, when compared to the same period during 2008. The increase in net interest income was the result of a decrease in interest expense of $1.6 million, or 21.4%, partially offset by a decrease in interest income of $544,000. Net interest rate spread increased to 3.40% for the year ended December 31, 2009 from 3.22% for the same period in 2008. Average interest-earning assets increased 5.4%, to $332.4 million, for the year ended December 31, 2009 as compared to $315.3 million for the year ended December 31, 2008. The yield on average interest earning assets decreased 49 basis points to 5.38% compared to 5.87% for the same period in 2008. The increase in average interest earning assets is primarily attributable to an $18.9 million increase in the average balance of the loan portfolio and a $4.7 million increase in interest earning deposits offset by a $6.4 million decrease in the average balance of security investments. Average interest-bearing liabilities increased $14.2 million, while the cost of funds decreased 66 basis points to 1.98% from 2.64% for the same period in 2008. The increase in the average balance of interest-bearing liabilities resulted from a $22.1 million, or 9.2%, increase in average deposits offset by a decrease of $7.9 million in average borrowed funds.

Net interest income for the quarter ended December 31, 2009 increased 12% when compared to the same period during 2008. The increase in net interest income was the result of a decrease in interest expense of $485,000, or 26%, partially offset by a decrease in interest income of $141,000. Net interest rate spread increased to 3.71% for the fourth quarter of 2009, from 3.34% for the same period in 2008. Average interest-earning assets increased 4% to $340.5 million for the quarter ended December 31, 2009, as compared to $326.3 million for the same quarter in 2008. The yield on interest-earning assets decreased 31 basis points to 5.48% compared to 5.79% for the same period in 2008. Average interest-bearing liabilities increased $6.1 million and the associated cost of funds decreased 68 basis points to 1.77% from 2.45% for the same period in 2008.

Provision for loan losses for the year ended December 31, 2009 increased to $876,000 from $820,000 for the same period in 2008. Allowance for loan losses to period end loans increased to 1.17% at December 31, 2009, as compared to 0.99% at December 31, 2008. Nonperforming loans to period end loans decreased to 0.88% at December 31, 2009, from 0.93% at December 31, 2008.

Non-interest income, exclusive of net gains and losses from the sale of securities, loans and foreclosed real estate, decreased to $2.7 million for the year ended December 31, 2009 compared to $2.8 million for the same period in the prior year. The decrease in non-interest income is primarily attributable to a $67,000 decrease in income from bank owned life insurance, and a $48,000 decrease in loan servicing fees, offset by a $44,000 increase in other charges, commissions and fees.

Non-interest income, exclusive of net gains and losses from securities, loans and foreclosed real estate, and other-than-temporary impairment charges, decreased to $707,000 for the quarter ended December 31, 2009 compared to $717,000 for the same quarter in the prior year.

Net gains and losses on securities increased $2.3 million, to a net gain of $112,000 for the year ended December 31, 2009, as compared to a net loss of $2.2 million for the year ended December 31, 2008. The net gain is a result of gains generated from the sales of securities through out the year. These gains were offset by recording other-than-temporary impairment charges during the fourth quarter, related primarily to the company's holdings in the SHAY Asset AMF Ultra Short Mortgage Fund, and AMF Large Cap Equity fund, combined with a second quarter other-than-temporary impairment charge of $298,000 relating to the company's holdings in CIT Group. Net gains and losses from loans and foreclosed real estate increased to a net gain of $54,000 for the year ended December 31, 2009, as compared to a net loss of $44,000 for the year ended December 31, 2008.

Net gains and losses from the sales of securities increased to net gains of $92,000 for the quarter ended December 31, 2009, as compared to a net loss of $41,000 when compared to the same quarter in 2008. The increase in net securities gain and losses is due to a $487,000 net gain from the sale of investment securities during the quarter, partially offset by other-than-temporary charges of $395,000 primarily relating to the company's holding in the SHAY Asset AMF Ultra Short Mortgage Fund, and the AMF Large Cap Equity Fund, as compared to the other-than-temporary impairment charges totaling $76,000 recorded in the same quarter of 2008. Net gains and losses from loans and foreclosed real estate decreased to a net loss of $26,000 for the quarter ended December 31, 2009, as compared to a net gain of $35,000 when compared to the same quarter of 2008. The decrease in gains from the sale of net loans and foreclosed real estate is the result of the loss recognized on the disposition of one foreclosure property, compared to the gains on the sale of foreclosure property recorded during the fourth quarter of the prior year.

Year-to-date non-interest expenses increased 12% from the prior year to $11.1 million from $9.9 million. During 2009, FDIC Assessment, salary and employee benefits, and other expenses, increased $692,000, $405,000, and $120,000 respectively. The increase in FDIC Assessment is due to the levying of a 5 basis point special assessment based on the banks assets, the increase in assessment rates and the exhausting of available credits reduced assessment charges in 2008. The increase in salaries and employee benefits was due to an increase in pension expense due primarily to unfavorable plan asset performance in the prior year, combined with annual merit based wage adjustments. The increase in other expenses was due to an increase in both audits and exams combined with the recording of $40,000 in reserves associated with the company's debit card rewards program.

Non-interest expenses increased $345,000, or 13.7%, for the quarter ended December 31, 2009. The increase in non-interest expense is due to an increase of $245,000 in FDIC Assessment, a $117,000 increase in salaries and employee benefits, and a $34,000 increase in other expenses. These increases were offset by a decrease in data processing expenses of $47,000 and $8,000 in building and occupancy.

About Pathfinder Bancorp, Inc.

Pathfinder Bancorp, Inc. is the mid-tier holding company of Pathfinder Bank, a New York chartered savings bank headquartered in Oswego, New York. The Bank has seven full service offices located in its market area consisting of Oswego County. Financial highlights for Pathfinder Bancorp, Inc. are attached. Presently, the only business conducted by Pathfinder Bancorp, Inc. is the 100% ownership of Pathfinder Bank and Pathfinder Statutory Trust II.

This release may contain certain forward-looking statements, which are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Company's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products, and services.

                         PATHFINDER BANCORP, INC.
                           FINANCIAL HIGHLIGHTS
              (dollars in thousands except per share amounts)

                                For the three months  For the twelve months
                                 ended December 31,    ended December 31,
                                    (Unaudited)           (Unaudited)
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Condensed Income Statement
  Interest and dividend income  $   4,544  $   4,685  $  17,806  $  18,350
  Interest expense                  1,355      1,840      6,029      7,675
                                ---------  ---------  ---------  ---------
    Net interest income             3,189      2,845     11,777     10,675
  Provision for loan losses           222        270        876        820
                                ---------  ---------  ---------  ---------
                                    2,967      2,575     10,901      9,855
  Noninterest income excluding
   net gains (losses) on
   securities, loans and
   foreclosed real estate             707        717      2,724      2,786
  Net gain (losses) on
   securities, loans and
   foreclosed real estate              66         (6)       166     (2,235)
  Noninterest expense               2,872      2,527     11,126      9,935
                                ---------  ---------  ---------  ---------
    Income before taxes               868        759      2,665        471
  Provision for income taxes          430        185      1,050        103
                                ---------  ---------  ---------  ---------
    Net Income                  $     438  $     574  $   1,615  $     368
                                =========  =========  =========  =========

Key Earnings Ratios
    Return on average assets         0.48%      0.65%      0.45%      0.11%
    Return on average equity         6.02%     11.07%      7.04%      1.70%
    Net interest margin (tax
     equivalent)                     3.88%      3.53%      3.56%      3.43%


Share and Per Share Data
  Basic weighted average shares
   outstanding                  2,484,832  2,484,832  2,484,832  2,484,167
  Basic earnings per share      $    0.15  $    0.23  $    0.61  $    0.15
  Diluted earnings per share         0.15       0.23       0.61       0.15
  Cash dividends per share         0.0300     0.1025     0.1200     0.4100
  Book value per share              11.77       8.04      11.77       8.04



                                December   December   December
                                   31,        31,        31,
                                  2009       2008       2007
                                ---------  ---------  ---------
Selected Balance Sheet Data
  Assets                        $ 371,849  $ 352,760  $ 320,691
  Earning assets                  343,071    324,872    290,192
  Total loans                     262,465    249,872    222,749
  Deposits                        296,839    269,438    251,085
  Borrowed Funds                   36,000     51,975     38,410
  Loan Loss Reserves                3,078      2,472      1,703
  Trust Preferred Debt              5,155      5,155      5,155
  Shareholders' equity             29,238     19,495     21,704

Asset Quality Ratios
  Net loan charge-offs
   (annualized) to average loans     0.11%      0.02%      0.08%
  Allowance for loan losses to
   period end loans                  1.17%      0.99%      0.76%
  Allowance for loan losses to
   nonperforming loans             133.07%    106.41%    107.04%
  Nonperforming loans to period
   end loans                         0.88%      0.93%      0.71%
  Nonperforming assets to total
   assets                            0.67%      0.75%      0.77%

Contact Information

  • CONTACT:
    Thomas W. Schneider - President, CEO
    James A. Dowd - Vice President, CFO
    Telephone: (315) 343-0057