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): November 5, 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 November 5, 2007, Pathfinder Bancorp, Inc. issued a press release disclosing
third 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: November 5, 2007 By: /s/ Thomas W. Schneider
------------------------------------- Thomas W. Schneider
President and Chief Executive
Officer
EXHIBIT INDEX
Earnings release dated November 5, 2007 announcing September 30, 2007 earnings.
FOR IMMEDIATE RELEASE
CONTACT: THOMAS W. SCHNEIDER - PRESIDENT, CEO
JAMES A. DOWD - SENIOR VICE PRESIDENT, CFO
TELEPHONE: (315) 343-0057
[GRAPHIC OMITED]
PATHFINDER BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS
Oswego, New York, November 5th, 2007 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) announced reported net income of $306,000, or $0.12 per
diluted share, for the three months ended September 30, 2007 as compared to
$170,000, or $0.07 per diluted share for the same period in 2006. For the nine
months ended September 30, 2007, the Company reported net income of $637,000, or
$.26 per share, compared to $713,000, or $0.29 per share, for the same period in
2006.
"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.
Exhibit 99.1
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)
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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
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(Unaudited) (Unaudited) (Unaudited)
September 30, December 31, September 30, September 30,
2007 2006 2006 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%