SOURCE: Pathfinder Bancorp, Inc.

Pathfinder Bancorp, Inc.

August 06, 2009 15:39 ET

Pathfinder Bancorp, Inc. Announces Second Quarter Earnings

OSWEGO, NY--(Marketwire - August 6, 2009) - Pathfinder Bancorp, Inc., the mid-tier holding company of Pathfinder Bank, (NASDAQ: PBHC) (listing, PathBcp) announced reported net income of $31,000, or $0.01 per diluted share, for the three months ended June 30, 2009 as compared to $300,000, or $0.12 per diluted share for the same period in 2008. For the six months ended June 30, 2009, the Company reported net income of $610,000, or $0.25 per share, compared to $632,000, or $0.25 per share, for the same period in 2008.

"Second quarter earnings were adversely impacted by a number of unusual items," according to Tom Schneider, President and CEO. "Among those items are a $298,000 charge to reflect the sale on July 13, 2009 of a bond holding in the CIT Group, $165,000 to accrue for a special assessment levied by the FDIC on all insured depositories to re-capitalize the deposit insurance fund, and a $58,000 charge to tax expense to increase a valuation reserve against deferred tax assets," Schneider continued. "In addition to these items, the Company has also increased its allowance for loan losses to reflect heightened portfolio risks resulting from the prolonged economic downturn."

"On a year-to-date basis, these items have partially negated a 10% increase in net interest income," Schneider stated. "Year-to-date earnings per share of $0.25 are equivalent to the same period in 2008."

Net interest income for the quarter ended June 30, 2009, increased 9% when compared to the same period during 2008. The increase in net interest income was the result of a decrease in interest expense of $304,000, or 16%, partially offset by a decrease in interest income of $65,000. Net interest rate spread increased to 3.24% for the second quarter of 2009, from 3.20% for the same period in 2008. Average interest-earning assets increased 5% to $328 million for the quarter ended June 30, 2009, as compared to $313 million for the same quarter in 2008. The yield on interest-earning assets decreased 48 basis points to 5.32% compared to 5.80% for the same period in 2008. The increase in average earning assets is primarily attributable to a $22.8 million increase in the average balance of the loan portfolio and a $1.8 million increase in the average balance of interest-earning deposits, offset by a decrease in the average balance of the investment securities portfolio of $9.7 million. Average interest-bearing liabilities increased $13.7 million and the associated cost of funds decreased 52 basis points to 2.08% from 2.60% for the same period in 2008. The increase in average interest-bearing liabilities resulted from a $15.7 million increase in deposits, offset by a $2.1 million decrease in the average balance of borrowed funds.

Provision for loan losses for the quarter ended June 30, 2009 increased to $272,000 from $135,000 for the same period in 2008. 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, as well as a general weakening in economic conditions. The Company's ratio of allowance for loan losses to period end loans increased to 1.11% at June 30, 2009 as compared to 0.99% at December 31, 2008. Nonperforming loans to period end loans increased to 1.03% at June 30, 2009, from 0.93% at December 31, 2008. Management believes the financial strength of the individual borrowers, combined with the related value of any underlying collateral, will not result in any recorded loss beyond currently established reserves.

Non-interest income, exclusive of net losses from other than temporary impairment charges and the sale of securities, loans and foreclosed real estate, increased to $658,000 for the quarter ended June 30, 2009 compared to $653,000 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 and increased debit card interchange fees.

Net losses on securities, loans and foreclosed real estate decreased $29,000 or 8.5%, for the quarter ended June 30, 2009 compared to the same quarter in 2008. Net securities losses decreased $44,000 or 13%, when compared to the same period in the prior year. The decrease in net securities losses is the result of recording an other-than-temporary impairment charge of $298,000 related to the Company's holding in the CIT Group security for the quarter ended June 30, 2009, compared to the recording of a $342,000 other-than-temporary charge relating to the Company's holdings in the AMF Ultra Short Mortgage Fund (the "fund") for the same quarter in the prior year. As current concerns grew relating to CIT Group Inc's ability to meet its current short term obligations, combined with the belief that other government programs were not going to be made available to CIT, Company management concluded that the liquidation of its current holding at a loss was prudent.

Non-interest expenses increased $395,000, or 16.3%, when compared to the same period in the prior year. A $241,000, or 76.8%, increase in other expenses was primarily due to an increase in FDIC assessments. Regular assessments on deposits increased by $40,000, and a special assessment of 5 basis points, based on assets held June 30, 2009, has been accrued for as required by FDIC. An increase in salaries and employee benefits of $135,000 was primarily due to an increase in pension plan expense due to the plan asset performance in the prior year. Professional and other services increased $39,000, which is primarily due to expenses incurred in connection with the Bank's 150th anniversary celebration.


Government Sponsored Programs

The board of directors and management are analyzing the potential merits of participating in the Capital Purchase Program (CPP) of the Treasury Department's Troubled Asset Relief Program (TARP). It is the general view of the board and management that in the present national economic risk environment, enhancing the Company's capital ratios is both prudent, given the current climate, and potentially opportunistic as we move into the next business cycle. Additionally, any increase to capital will continue to support the Company's lending activities to individuals, families, and businesses in our community. In November, Pathfinder Bancorp, MHC the mutual holding company parent of Pathfinder Bancorp, Inc filed its original application requesting Capital Purchase Program funds under the Treasury's Troubled Asset Relief Program. Management has received preliminary verbal approval of its CPP application and is awaiting the finalization of the associated legal documents pertaining to companies operating in the mutual holding company structure.

The Company is participating in the FDIC's Temporary Liquidity Guarantee Program, including the transaction account guarantee program, which insures all non-interest bearing transaction accounts regardless of dollar amount.

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 six months
                          ended June 30,              ended June 30,
                            (Unaudited)                 (Unaudited)
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------

Condensed Income
 Statement
  Interest and
   dividend income  $      4,441  $      4,506  $      8,871  $      9,006
  Interest expense         1,565         1,869         3,282         3,957
                    ------------  ------------  ------------  ------------
    Net interest
     income                2,876         2,637         5,589         5,049
  Provision for loan
   losses                    272           135           407           280
                    ------------  ------------  ------------  ------------
    Net interest
     income after
     provision for
     loan losses           2,604         2,502         5,182         4,769
  Noninterest income
   excluding net
   losses on
   securities, loans
   and foreclosed
   real estate               658           653         1,289         1,351
  Net losses on
   securities,
   loans and
   foreclosed
   real estate              (313)         (342)         (145)         (336)
  Noninterest
   expense                 2,816         2,421         5,389         4,946
                    ------------  ------------  ------------  ------------
    Income before
     taxes                   133           392           937           838
  Provision for
   income taxes              102            92           327           206
                    ------------  ------------  ------------  ------------
    Net Income      $         31  $        300  $        610  $        632
                    ============  ============  ============  ============

Key Earnings Ratios
   Return on average
    assets                  0.03%         0.35%         0.34%         0.38%
   Return on average
    equity                  0.61%         5.41%         6.08%         5.68%
   Net interest
    margin (tax
    equivalent)             3.41%         3.41%         3.41%         3.31%


Share and Per Share
 Data
  Basic weighted
   average shares
   outstanding         2,484,832     2,483,732     2,484,832     2,483,732
  Basic earnings per
   share                  0.0125        0.1200        0.2455        0.2500
  Diluted earnings
   per share              0.0125        0.1200        0.2461        0.2500
  Cash dividends per
   share                  0.0300        0.1025        0.0600        0.2050
  Book value per
   share                                     -          8.09          8.51




                      June 30,     December 31,    June 30,
                        2009          2008           2008
                    ------------  ------------  ------------
Selected Balance
 Sheet Data
  Assets            $    347,224  $    352,760  $    346,304
  Earning assets         320,622       324,872       314,770
  Total loans            250,187       249,872       232,951
  Deposits               280,906       269,438       266,829
  Borrowed Funds          36,400        51,975        48,370
  Loan Loss Reserves       2,772         2,472         1,987
  Trust Preferred
   Debt                    5,155         5,155         5,155
  Shareholders'
   equity                 20,114        19,495        21,147

Asset Quality
 Ratios
  Net loan
   charge-offs
   (annualized) to
   average loans            0.09%         0.02%         0.00%
  Allowance for loan
   losses to period
   end loans                1.11%         0.99%         0.85%
  Allowance for loan
   losses to
   nonperforming
   loans                  107.48%       106.41%        68.40%
  Nonperforming
   loans to period
   end loans                1.03%         0.93%         1.25%
  Nonperforming
   assets to total
   assets                   0.82%         0.75%         1.03%


Contact Information

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