SOURCE: Pathfinder Bancorp, Inc.

May 05, 2005 12:38 ET

Pathfinder Bancorp, Inc. Announces First Quarter Earnings

OSWEGO, NY -- (MARKET WIRE) -- May 5, 2005 -- Pathfinder Bancorp, Inc., the mid-tier holding company of Pathfinder Bank, (NASDAQ: PBHC), (listing: PathBcp) announced reported net income of $149,000, or $0.06 per share, for the three months ended March 31, 2005 as compared to $323,000, or $0.13 per share for the same period in 2004.

"Strong deposit growth, soft loan demand, and a flattening yield curve have combined to further compress net interest rate spread and reduce earnings," according to Thomas W. Schneider, President and Chief Executive Officer. "Deposit growth of 4% during the first quarter, and some significant loan payoffs in the commercial portfolio, led to excess liquidity throughout much of the quarter. Most of this liquidity was placed into short-term securities at low yield levels as we expect loan demand to accelerate during the spring and summer months."

"Expense increases associated with an expanding commercial lending sales force, information services upgrades and internal training programs also contributed to a decline in net earnings over the prior quarter and the prior year," stated Schneider.

"Lower charge-offs, improved asset quality and higher revenue from fees offset some of the adverse impact from lower margins and higher expenses. We expect fee income to continue to grow and margins to improve from a better asset mix during the next quarter. The addition of a new branch scheduled to open in the latter part of the second quarter will decrease earnings on a net basis over the near term."

Net interest income for the three months ended March 31, 2005, remained relatively constant at $2.2 million when compared to the same period during 2004. Interest income increased $137,000, or 4%, offset by increased interest expense of $142,000, or 10%. Net interest rate spread decreased to 3.06% for the first quarter of 2005 from 3.23% for the same period in 2004. Average interest-earning assets increased 6% to $280.2 million at March 31, 2005 as compared to $264.7 million at March 31, 2004, while the yield on those assets decreased 8 basis points to 5.34% compared to 5.42% for the same period in 2004. The increase in average earning assets is primarily attributable to a $16.1 million increase in average investment securities and a $2.3 million increase in average interest earning deposits, offset by a decrease in average net loans receivable of $3.0 million. Average interest-bearing liabilities increased $15.9 million and the cost of funds increased 8 basis points to 2.27% from 2.19% for the same period in 2004. The increase in the average balance of interest-bearing liabilities resulted primarily from a $22.3 million growth in average deposits. The growth in deposits primarily resulted from the Company's focus on attracting new municipal deposit customers, as well as expansion of our retail deposit base.

Provision for loan losses for the quarter ended March 31, 2005 decreased to $72,000 from $188,000 for the same period in 2004, primarily as a result of a decrease in non-performing loans and total loans. The Company's ratio of allowance for loan losses to period end loans has increased to 1.01% at March 31, 2005 from 0.98% at December 31, 2004. Nonperforming loans to period end loans has decreased to 0.94% at March 31, 2005 from 0.99% at December 31, 2004.

Other income, net of gains and losses from the sale of securities, loans and other real estate, increased 13% to $501,000 for the quarter ended March 31, 2005 compared to $444,000 for the same period in the prior year. The increase in other income is primarily attributable to a $39,000 increase in service charges on deposit accounts and a $22,000 increase in other charges commissions and fees. Net gains and losses from the sale of securities, loans and foreclosed real estate decreased $246,000 to a net loss of $12,000 for the quarter ended March 31, 2005 compared to a net gain of $234,000 for the same period in the prior year.

Other expenses increased 8% to $2.4 million for the quarter ended March 31, 2005, when compared to the same period in the prior year. The increase in other expenses was primarily due to an $82,000 increase in data processing expenses, a $61,000 increase in salary and employee benefits, a $43,000 increase in professional and other expenses and an $18,000 increase in other expenses. These increases were partially offset by a $34,000 decrease in building occupancy expenses. The increase in data processing expenses was primarily due to software purchases and related annual maintenance charges, along with increased Internet banking and check processing charges. The increase in professional and other services primarily resulted from costs associated with a leadership training and performance management program, of which $18,000 of these costs were reimbursed by a New York State Grant and reflected in other income.

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 six 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
                                                    ended March 31,
                                                      (Unaudited)
                                                  2005           2004
                                              -----------    -----------
Condensed Income Statement
  Interest income                             $     3,698    $     3,561
  Interest expense                                  1,499          1,357
                                              -----------    -----------
    Net interest income                             2,199          2,204
Provision for loan losses                              72            188
                                              -----------    -----------
    Net interest income after provision
     for loan losses                                2,127          2,016
  Other income                                        501            444
  Net (losses) gains on securities, loans and
   foreclosed real estate                             (12)           234
  Other expense                                     2,420          2,250
                                              -----------    -----------
    Income before taxes                               196            444
  Provision for income taxes                           47            121
                                              -----------    -----------
    Net income                                $       149    $       323
                                              ===========    ===========

Key Earnings Ratios
  Return on average assets                           0.19%          0.45%
  Return on average equity                           2.77%          5.83%
  Return on average intangible equity (a)            3.49%          7.38%
  Net interest margin (tax equivalent)               3.20%          3.36%

  (a) tangible equity excludes
     intangible assets

Share and Per Share Data
  Basic weighted average shares outstanding     2,447,210      2,504,238
  Basic earnings per share                    $      0.06    $      0.13
  Diluted earnings per share                         0.06           0.13
  Cash dividends per share                         0.1025           0.10
  Book value per share                               8.54           8.88

Cash Earnings
  Return on average assets - cash earnings*          0.26%          0.53%
  Return on average equity - cash earnings*          3.78%          6.85%
  Cash earnings per share - basic*                   0.08           0.15


                            (Unaudited)             (Unaudited) (Unaudited)
                             March 31,  December 31, March 31,   March 31,
                               2005         2004       2004        2003
                             ---------   ---------   ---------   ---------
Selected Balance Sheet Data
  Assets                     $ 308,613   $ 302,037   $ 302,316   $ 282,638
  Earning assets               278,890     273,532     276,421     255,157
  Total loans                  186,858     186,952     186,646     183,345
  Deposits                     244,980     236,672     230,951     211,446
  Borrowed Funds                34,360      35,360      40,960      41,860
  Trust Preferred Debt           5,155       5,155       5,155       5,000
  Shareholders' equity          20,954      21,826      22,236      20,909

Asset Quality Ratios
  Net loan charge-offs
   (annualized) to average
   loans                          0.04%       0.33%       0.27%       0.15%
  Allowance for loan losses
   to period end loans            1.01%       0.98%       0.95%       0.83%
  Allowance for loan losses
   to nonperforming loans       106.58%      98.76%      59.87%      81.99%
  Nonperforming loans to
   period end loans               0.94%       0.99%       1.59%       1.01%
  Nonperforming assets to
   total assets                   0.85%       0.88%       1.07%       1.17%


* Cash earnings excludes noncash charges for amortization relating to
  intangibles and the allocation of ESOP stock:
                                    For the three months ended March 31,
                                                  2005           2004
    Net  Income                               $       149    $       323
    Add back (net of tax effect):
        Amortization of intangibles                    34             34
        Stock-based compensation                       20             23
                                              -----------    -----------
    Cash earnings                             $       203    $       380
                                              ===========    ===========

Contact Information

  • CONTACT:
    Thomas W. Schneider
    President, CEO

    James A. Dowd
    Vice President, CFO

    214 West First Street
    Oswego, NY 13126
    315-343-0057