UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 03, 2007
Pathfinder Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Federal 000-23601 16-1540137
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
Registrant's telephone number, including area code: (315) 343-0057
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Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Section 2 - Financial Information
Item 2.02
On May 3, 2007, Pathfinder Bancorp, Inc. issued a press release disclosing first
quarter 2007 financial results. A copy of the press release is included as
Exhibit 99.1 to this report.
The information in Item 2.02 to this Form 8-K and Exhibit 99.1 in accordance
with general instruction B.2 of Form 8-K, is being furnished and shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934,
nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except shall be
expressly set forth by specific in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PATHFINDER BANCORP, INC.
Date: May 3, 2007 By: /s/ Thomas W. Schneider
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Thomas W. Schneider
President and Chief Executive
Officer
EXHIBIT INDEX
Earnings release dated May 3, 2007 announcing March 31, 2007 earnings.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: THOMAS W. SCHNEIDER - PRESIDENT, CEO
JAMES A. DOWD - SENIOR VICE PRESIDENT, CFO
TELEPHONE: (315) 343-0057
PATHFINDER BANCORP, INC. ANNOUNCES FIRST QUARTER EARNINGS
Oswego, New York, May 3, 2007 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) announced reported net income of $165,000, or $0.07 per
diluted share, for the three months ended March 31, 2007 as compared to
$240,000, or $0.10 per diluted share for the same period in 2006.
"We are disappointed in the continued pressure on earnings, particularly given
our core business growth metrics." according to Thomas W. Schneider, President
and CEO. "While product and customer growth has well exceeded the growth rates
of our market, net interest income volume gains are being fully offset by
continued margin compression from the inverted yield curve. Year over year
growth in loans and earning assets approximates 7.0% while deposit growth was
9.6%. Net interest rate spread compression of 20 basis points in the same
period has prevented this growth from being reflected in earnings".
"Additionally," Schneider continued, "the first quarter reflects direct external
costs of approximately $60,000 associated with the documentation phase of
Sarbanes-Oxley Section 404 compliance. We will continue to focus on our deposit
and lending business to enhance net interest income while seeking to diversify
revenue sources and manage costs through this prolonged interest rate cycle."
Net interest income for the three months ended March 31, 2007, increased $4,000
when compared to the same period during 2006. Interest income increased
$404,000, or 10%, offset by increased interest expense of $400,000, or 23%. Net
interest rate spread decreased to 2.80% for the first quarter of 2007 from 3.00%
for the same period in 2006. Average interest-earning assets increased 3% to
$284.6 million at March 31, 2007 as compared to $275.9 million at March 31,
2006, and the yield on those assets increased 37 basis points to 6.04% compared
to 5.67% for the same period in 2006. The increase in average earning assets is
primarily attributable to a $13.7 million increase in the average loan portfolio
and a $6.3 million increase in interest earning deposits, offset by a decrease
in average investment securities of $11.3 million. Average interest-bearing
liabilities increased $2.7 million and the cost of funds increased 58 basis
points to 3.24% from 2.66% for the same period in 2006. The increase in the
average balance of interest-bearing liabilities resulted primarily from an $11.6
million increase in average deposits, offset by a $9.0 million decrease in
borrowed funds.
Provision for loan losses for the quarter ended March 31, 2007 increased to
$50,000 from $22,000 for the same period in 2006. The increased provision is
reflective of the increased risk inherent with the growing commercial loan
portfolio. The Company's ratio of allowance for loan losses to period end loans
decreased to 0.72% at March 31, 2007 as compared to 0.74% at December 31, 2006.
Nonperforming loans to period end loans have increased slightly to 0.66% at
March 31, 2007 from 0.63% at December 31, 2006.
Non-interest income, exclusive of gains and losses from the sale of securities,
loans and foreclosed real estate, decreased to $601,000 for the quarter ended
March 31, 2007 compared to $614,000 for the same quarter in the prior year. The
decrease in non-interest income is primarily attributable to a $38,000 decrease
in service charges on deposit accounts, offset by a $13,000 increase in other
charges, commissions and fees, a $7,000 increase in the value of bank owned life
insurance and a $5,000 increase in loan servicing fees. The decrease in service
charges on deposit accounts is attributable to decreased utilization of our
extended overdraft program by the customer base. The increase in other charges,
commissions and fees is primarily attributable to an increase in revenue from
in-house investment services and increased fees associated with the bank's Visa
debit card usage.
Net losses from the sale of securities, loans and foreclosed real estate for the
quarter ended March 31, 2007 decreased $11,000 when compared to the same quarter
of 2006.
Other expenses remained relatively consistent at $2.4 million for the quarter
ended March 31, 2007, when compared to the same period in the prior year.
Professional and other services expense increased $122,000 primarily from
consulting expenses associated with the on-going SOX 404 process review,
additional legal costs associated with expanded compensation disclosures within
the annual proxy statement and a direct mailing campaign aimed at attracting new
deposit customers. Data processing expenses increased $18,000 primarily due to
an increase in internet banking costs, ATM processing charges, depreciation
expense and maintenance charges. These increases were offset by a $48,000 and
$47,000 decrease in salaries and employee benefits and other expenses,
respectively. The decrease in salaries and employee benefits was primarily due
to a reduction in compensation and employee benefits, as management has
realigned responsibilities in its effort to contain expenses. The decrease in
other expenses was the result of a reduction in costs associated with foreclosed
real estate properties as the number of properties decreased to 4 from 13 in the
comparable quarter of 2006, combined with a reduction in audit and exam
expenses.
On March 22, 2007, the Company entered into a trust preferred issuance for $5.0
million, adjustable quarterly at a 1.65% spread over the 3-month LIBOR. The
Company intends to use all the proceeds from the issuance to retire its existing
trust preferred obligation on June 27th, 2007, at its first call date.
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 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS
ENDED MARCH 31,
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2007 2006
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CONDENSED INCOME STATEMENT
Interest income $ 4,269 $ 3,865
Interest expense 2,148 1,748
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Net interest income 2,121 2,117
Provision for loan losses 50 22
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Net interest income after provision for loan losses 2,071 2,095
Other income 601 614
Net losses on securities, loans and foreclosed real estate (10) (21)
Other expense 2,458 2,411
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Income before taxes 204 277
Provision for income taxes 39 37
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NET INCOME $ 165 $ 240
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KEY EARNINGS RATIOS
Return on average assets 0.21% 0.31%
Return on average equity 3.13% 4.54%
Return on average tangible equity (a) 3.86% 5.67%
Net interest margin (tax equivalent) 3.02% 3.13%
(a) tangible equity excludes intangible assets
SHARE AND PER SHARE DATA
Basic weighted average shares outstanding 2,481,572 2,463,132
Basic earnings per share $ 0.07 $ 0.10
Diluted earnings per share 0.07 0.10
Cash dividends per share 0.1025 0.1025
Book value per share 8.43 8.47
MARCH 31, DECEMBER 31, MARCH 31, MARCH 31,
2007 2006 2006 2005
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SELECTED BALANCE SHEET DATA
Assets $317,219 $301,382 $303,754 $308,613
Earning assets 290,321 274,083 273,372 278,890
Total loans 204,691 203,209 191,381 186,858
Deposits 260,461 245,585 237,676 244,980
Borrowed Funds 22,010 26,360 37,460 34,360
Trust Preferred Debt 10,310 5,155 5,155 5,155
Shareholders' equity 20,932 20,850 20,859 20,954
ASSET QUALITY RATIOS
Net loan charge-offs (annualized) to average loans 0.13% 0.12% 0.03% 0.04%
Allowance for loan losses to period end loans 0.72% 0.74% 0.88% 1.01%
Allowance for loan losses to nonperforming loans 109.70% 116.97% 118.64% 106.58%
Nonperforming loans to period end loans 0.66% 0.63% 0.75% 0.94%
Nonperforming assets to total assets 0.54% 0.58% 0.76% 0.85%