SOURCE: Pathfinder Bank

February 06, 2007 10:48 ET

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

OSWEGO, NY -- (MARKET WIRE) -- February 6, 2007 -- Pathfinder Bancorp, Inc., the mid-tier holding company of Pathfinder Bank (NASDAQ: PBHC), reported net income of $315,000, or $0.13 per share, for the three months ended December 31, 2006 as compared to a net loss of $37,000, or $(0.02) per share for the same period in 2005. For the year ended December 31, 2006, the Company reported net income of $1.0 million, or $0.42 per share, compared to $462,000, or $0.19 per share, for the same period in 2005.

"We are pleased with the improved results for 2006 and a positive earnings trend despite the compression of net interest rate spread that the Company has experienced as a result of the inverted interest rate yield curve," stated Thomas W. Schneider, President and CEO.

"The significant improvement in 2006 earnings performance is the result of the continued execution by our staff and management of the strategic initiatives set forth by our Board of Directors," according to Schneider. "We experienced record growth of our commercial loan portfolio of $13.3 million, or 27%. The growth of these higher yielding assets was funded by deposit growth of $9.2 million, or 4%, as well as a reduction of lower earning investment securities. Additionally, the Company increased fee source income by 6% and reduced operating expenses by 4%."

"We look forward to continuing to deliver quality services to our customers and progressing our strategic plan to enhance franchise value," Schneider stated.

Net interest income for the year ended December 31, 2006 decreased $416,000, or 5%, when compared to the same period during 2005. Interest expense increased $1.2 million, or 19%, offset by an increase in interest income of $771,000, or 5%. Net interest rate spread decreased to 2.92% for the year ended December 31, 2006 from 3.07% for the same period in 2005. Average interest-earning assets decreased 2%, to $273.4 million, for the year ended December 31, 2006 as compared to $278.8 million for the year ended December 31, 2005. The yield on average interest earning assets increased 37 basis points to 5.86% compared to 5.49% for the same period in 2005. The decrease in average interest earning assets is primarily attributable to a $10.7 million decrease in the average balance of investment securities and a $1.3 million decrease in the average balance of interest-earning deposits, offset by a $6.5 million increase in the average balance of the loan portfolio. Average interest-bearing liabilities decreased $6.7 million, while the cost of funds increased 52 basis points to 2.94% from 2.42% for the same period in 2005. The decrease in the average balance of interest-bearing liabilities resulted primarily from a $3.8 million, or 9%, decrease in borrowed funds and a $2.9 million, or 1%, decrease in average deposits.

Provision for loan losses for the year ended December 31, 2006 decreased 93% to $23,000 from $311,000 for the same period in 2005. The decrease in the provision primarily resulted from fewer charge-offs and improving asset quality. The Company's ratio of allowance for loan losses to period end loans has decreased to 0.74% at December 31, 2006 from 0.89% at December 31, 2005. Nonperforming loans to period end loans decreased to 0.63% at December 31, 2006, compared to 0.89% at December 31, 2005.

Non-interest income, exclusive of net gains and losses from the sale of securities, loans and foreclosed real estate, increased to $2.4 million for the year ended December 31, 2006 compared to $2.3 million for the same period in the prior year. The increase in non-interest income is primarily attributable to a $73,000 increase in service charges on deposit accounts, a $9,000 increase in loan servicing fees and a $7,000 increase in the earnings on bank owned life insurance.

Net gains and losses from the sale of securities, loans and foreclosed real estate increased $512,000, to a net gain of $219,000 for the year ended December 31, 2006, as compared to a net loss of $293,000 for the year ended December 31, 2005.

Operating expenses decreased 4% from the prior year to $9.7 million from $10.1 million. During 2006, salary and employee benefits, professional and other services and other expenses decreased $116,000, $167,000 and $150,000, respectively. The decrease in salaries and employee benefits was primarily due to a reduction in full time equivalent personnel to 96 at year end December 2006 as compared to 105 at year ended December 2005, combined with a reduction in stock based compensation expenses. The decrease in professional and other services was primarily due to a reduction in outside consulting charges, offset by an increase in advertising costs associated with a promotional mailing campaign. The decrease in other expenses was primarily due to lower expenses associated with ORE properties, audits and exams, and a write down of property and equipment at our former Fulton Branch that occurred in 2005.

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 twelve months
                              ended December 31,      ended December 31,
                                  (Unaudited)       (Unaudited)
                            ----------------------  ----------  ----------
                            ----------  ----------  ----------  ----------
                               2006        2005        2006        2005
                            ----------  ----------  ----------  ----------

Condensed Income Statement
  Interest income           $    4,105  $    3,784  $   15,869  $   15,098
  Interest expense               2,032       1,704       7,543       6,356
                            ----------  ----------  ----------  ----------
    Net interest income          2,073       2,080       8,326       8,742
  Provision for loan losses          -          82          23         311
                            ----------  ----------  ----------  ----------
    Net interest income
     after provision for
     loan losses                 2,073       1,998       8,303       8,431
  Other income                     892         540       2,635       2,040
  Other expense                  2,555       2,621       9,667      10,060
                            ----------  ----------  ----------  ----------
    Income before taxes            410         (83)      1,271         411
  Provision for income
   taxes                            95         (46)        243         (51)
                            ----------  ----------  ----------  ----------
    Net income              $      315  $      (37) $    1,028  $      462
                            ==========  ==========  ==========  ==========

Key Earnings Ratios
    Return on average
     assets                       0.42%      -0.05%       0.34%       0.15%
    Return on average
     equity                       5.82%      -0.70%       4.86%       2.16%
    Return on average
     tangible equity (a)          7.16%      -0.88%       6.04%       2.72%
    Net interest margin
     (tax equivalent)             3.06%       3.13%       3.10%       3.21%


Share and Per Share Data
  Basic weighted average
   shares outstanding        2,465,047   2,463,132   2,463,703   2,456,110
  Basic earnings per share  $     0.13  $    (0.02) $     0.42  $     0.19
  Diluted earnings per
   share                          0.13       (0.02)       0.41        0.19
  Cash dividends per share      0.1025      0.1025       0.410       0.410
  Book value per share               -           -        8.46        8.50


                            (Unaudited)
                             December    December    December    December
                                31,         31,         31,         31,
                               2006        2005        2004        2003
                            ----------  ----------  ----------  ----------
Selected Balance Sheet Data
  Assets                    $  301,382  $  296,948  $  302,037  $  277,940
  Earning assets               274,083     266,198     273,532     254,755
  Total loans                  203,209     189,568     186,952     188,717
  Deposits                     245,585     236,377     236,672     206,894
  Borrowed Funds                26,360      31,360      35,360      40,960
  Trust Preferred Debt           5,155       5,155       5,155       5,000
  Shareholders' equity          20,850      20,928      21,826      21,785

Asset Quality Ratios
  Net loan charge-offs
   (annualized) to average
   loans                          0.12%       0.24%       0.33%       0.19%
  Allowance for loan losses
   to period end loans            0.74%       0.89%       0.98%       0.91%
  Allowance for loan losses
   to nonperforming loans       116.97%      99.94%      98.76%      57.32%
  Nonperforming loans to
   period end loans               0.63%       0.89%       0.99%       1.59%
  Nonperforming assets to
   total assets                   0.58%       0.82%       0.88%       1.15%


(a) Tangible equity excludes intangible assets

Contact Information

  • CONTACT:
    Thomas W. Schneider
    President, CEO

    James A. Dowd
    Vice President, CFO

    Telephone: (315) 343-0057