OSWEGO, NY--(Marketwire - November 5, 2007) - Pathfinder Bancorp, Inc., the mid-tier holding
company of Pathfinder Bank (
"The rate of growth and continued diversification of our loan portfolio has enhanced revenues despite continued compression on our net interest rate spread," according to Thomas W. Schneider, President and CEO. "Additionally, the turmoil in the markets over the last quarter, fueled by the fallout in the sub-prime mortgage market, has led to widening credit spreads and a positive slope to the yield curve. These developments create a more profitable operating environment for the Bank and should reverse the adverse impact of rate compression that has occurred over the last 18 months. Net interest margin should be positively impacted by both the volume increases and rate environment," Schneider continued.
"The large scale impact of the unfortunate sub-prime mortgage debacle should not adversely affect the Bank over the foreseeable future for two primary reasons," Schneider stated. "One is that the Bank did not participate in the type of mortgages that have led to the problem, and two, our market did not experience the type of real estate valuation increases that resulted in speculative lending and borrowing. While we cannot anticipate the regional impact of a national economic slowdown, and we are experiencing a moderate rise in delinquency levels, we have not seen the kind of delinquencies and foreclosure growth rates in this market that are being experienced in other regions on a national basis."
Net interest income for the quarter ended September 30, 2007, increased $88,000, or 4%, when compared to the same period during 2006. Interest income increased $333,000, or 8%, offset by increased interest expense of $245,000, or 13%. Net interest rate spread decreased to 2.86% for the third quarter of 2007 from 2.92% for the same period in 2006. Average interest-earning assets increased 5% to $282.5 million for the quarter ended September 30, 2007 as compared to $270.3 million for the same quarter of 2006. The yield on interest-earning assets increased 19 basis points to 6.13% compared to 5.94% for the same period in 2006. The increase in average earning assets is primarily attributable to a $16.2 million increase in the average loan portfolio, offset by a decrease in average investment securities of $4.0 million. Average interest-bearing liabilities increased 3% to $260.6 million for the quarter ended September 30, 2007 as compared to $252.1 million for the same quarter of 2006. The cost of funds increased 26 basis points to 3.28% from 3.02% for the same period in 2006. The increase in the average balance of interest-bearing liabilities resulted primarily from an $18.1 million increase in average deposits, offset by a $9.6 million decrease in borrowed funds.
Provision for loan losses for the quarter ended September 30, 2007 increased $155,000 when compared to the same period in 2006. The increased provision is reflective of a growing loan portfolio and one more heavily weighted to commercial term and commercial real estate, which have higher inherent risk characteristics than a consumer real estate portfolio. The Company's ratio of allowance for loan losses to period end loans increased to 0.76% at September 30, 2007 as compared to 0.74% at December 31, 2006. Nonperforming loans to period end loans have increased to 0.94% at September 30, 2007 from 0.57% at December 31, 2006, primarily due to the nonperforming status of two commercial loans. Management believes that the existing reserves provided on these loans are sufficient to cover any anticipated losses.
Non-interest income, exclusive of gains and losses from the sale of securities, loans and foreclosed real estate, increased to $665,000 for the quarter ended September 30, 2007 compared to $565,000 for the same quarter in the prior year. The increase in non-interest income is primarily attributable to an increase in service charges on deposit accounts, investment services revenue and fees associated with the Bank's Visa Debit card usage.
Net gains on sales and impairment of investment securities increased $111,000 when compared to the same quarter of 2006, resulting from the gain recognized on the sale of company's holdings in the common stock of Fannie Mae. Net gains from the sale of securities, loans and foreclosed real estate for the quarter ended September 30, 2007 increased $45,000 when compared to the same quarter of 2006.
Non-interest expense increased $21,000, or 1%, for the quarter ended September 30, 2007 when compared to the same period in the prior year. The non-interest expense increase was a result of a $30,000, or 10% increase in other expenses due to an increase in no cost closing loans and the related mortgage recording expenses, additional FDIC assessment charges and external bank service charges. Building occupancy expenses increased 5% when compared to the quarter ended September 30, 2006 due to building maintenance and landscaping improvements at several branches. Data processing expenses increased 3% primarily due to an increase in Internet banking costs and customer check processing charges. These increases were offset by a 3% decrease in salaries and employee benefits expenses primarily due to deferred compensation costs incurred in the third quarter of 2006 that did not recur in 2007 and an increase in the FASB 91 deferred payroll expense credit directly related to the increase in loan originations.
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 I.
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 nine months
ended September 30, ended September 30,
(Unaudited) (Unaudited)
-------------------- --------------------
2007 2006 2007 2006
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Condensed Income Statement
Interest and dividend income $ 4,300 $ 3,967 $ 12,906 $ 11,764
Interest expense 2,147 1,902 6,504 5,493
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Net interest income 2,153 2,065 6,402 6,271
Provision for loan losses 155 - 280 23
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Net interest income after
provision for loan losses 1,998 2,065 6,122 6,248
Noninterest income 792 536 2,060 1,725
Noninterest expense 2,412 2,391 7,397 7,112
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Income before taxes 378 210 785 861
Provision for income taxes 72 40 148 148
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Net income $ 306 $ 170 $ 637 $ 713
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Key Earnings Ratios
Return on average assets 0.39% 0.23% 0.27% 0.32%
Return on average equity 5.80% 3.21% 4.03% 4.53%
Net interest margin (tax
equivalent) 2.86% 3.11% 3.04% 3.12%
Share and Per Share Data
Basic weighted average shares
outstanding 2,483,532 2,463,482 2,482,886 2,463,250
Basic earnings per share $ 0.12 $ 0.07 $ 0.26 $ 0.29
Diluted earnings per share 0.12 0.07 0.26 0.29
Cash dividends per share 0.1025 0.1025 0.3075 0.3075
Book value per share - - 8.48 8.67
========= ========= ========= =========
(Unaudited) (Unaudited)(Unaudited)
September December September September
30, 2007 31, 2006 30, 2006 30, 2005
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Selected Balance Sheet Data
Assets $ 313,841 $ 301,382 $ 298,003 $ 303,076
Earning assets 283,444 274,083 268,550 272,290
Total loans 215,855 203,209 197,463 185,459
Deposits 255,919 245,585 237,921 240,852
Borrowed Funds 28,010 26,360 30,660 32,360
Trust Preferred Debt 5,155 5,155 5,155 5,155
Shareholders' equity 21,056 20,850 21,365 21,578
Asset Quality Ratios
Net loan charge-offs
(annualized) to average loans 0.08% 0.11% 0.06% 0.18%
Allowance for loan losses to
period end loans 0.76% 0.74% 0.83% 0.97%
Allowance for loan losses to
nonperforming loans 80.72% 127.65% 120.58% 109.75%
Nonperforming loans to period
end loans 0.94% 0.57% 0.69% 0.88%
Nonperforming assets to total
assets 0.75% 0.54% 0.62% 0.85%
Contact Information: CONTACT: Thomas W. Schneider President, CEO James A. Dowd Vice President, CFO Telephone: (315) 343-0057