earningsrelease.htm
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): February 17, 2009
Pathfinder
Bancorp, Inc.
(Exact
name of registrant as specified in its charter)
Federal
000-23601 16-1540137
(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
Not
Applicable
(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))
Section 2
– Financial Information
Item
2.02
On
February 17, 2009, Pathfinder Bancorp, Inc. issued a press release disclosing
fourth quarter and year end 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: February
17,
2009 By: /s/ Thomas W.
Schneider
Thomas
W. Schneider
President and Chief Executive
Officer
EXHIBIT
INDEX
Earnings
release dated February 17, 2009 announcing December 31, 2008
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 Fourth Quarter and Year-End Earnings
Oswego,
New York, February 17,
2009 ………… Pathfinder Bancorp, Inc., the mid-tier holding company of
Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC, listing: PathBcp)
reported record quarterly net income of $574,000, or $0.23 per basic and diluted
share, for the three months ended December 31, 2008 as compared to $485,000, or
$0.20 per basic and diluted share for the same period in 2007. For
the twelve months ended December 31, 2008, the Company reported net income of
$368,000 or $0.15 per basic and diluted share, compared to $1.1 million, or
$0.45 per basic and diluted share, for the same period in 2007.
Full year
earnings were impacted by $1.6 million in unrealized losses net of related tax
benefits associated with other than temporary impairment charges on four
securities within the investment securities portfolio. Exclusive of
these charges, core earnings would have been a record $2.0 million.
Core
earnings performance was driven by strong organic growth of both the loan and
deposit portfolios, improved net interest margins and controlled operating
expenses.
“Our
fourth quarter earnings performance was the highest level in our Company’s
history”, said President and Chief Executive Officer Thomas W.
Schneider. “These results reflect a significant improvement in our
net interest margin as balance sheet growth and diversification drove revenues
while expenses remained well controlled.”
“As
Pathfinder Bank enters its 150th year,
we remain committed to the same sound banking practices that have served us well
throughout our history.” Schneider added, “These fundamental
practices and our focus on our customers have better prepared us for these
turbulent times. We have experienced loan growth of $27 million,
deposit growth of $18 million, and net interest margin growth of 35 basis
points, while our operating expenses have increased just $97,000, or
1.0%. Additionally, we increased our loan loss allowances by
$769,000, or 45.2%, while net charge-offs were just $51,000.”
“We
anticipate that 2009 will be extremely challenging for our industry”, Schneider
added, “and while we must continue to enhance every aspect of our
diligence, we feel we are very well positioned to continue to be one of the
leaders of banking services in our market place.”
Net
interest income for the quarter ended December 31, 2008, increased $580,000, or
26%, when compared to the same period during 2007. Interest income
increased $282,000, or 6%, combined with a decrease in interest expense of
$298,000, or 14%. Net interest rate spread increased to 3.34% for the
fourth quarter of 2008 from 2.88% for the same period in
2007. Average interest-earning assets increased 13% to $326.3 million
for the quarter ended December 31, 2008, as compared to $287.8 million for the
same quarter of 2007. The yield on interest-earning assets decreased
37 basis points to 5.79% compared to 6.16% for the same period in
2007. Average interest-bearing liabilities increased $36.7 million
and the cost of funds decreased 83 basis points to 2.45% from 3.28% for the same
period in 2007.
Net
interest income for the year ended December 31, 2008 increased $2.0 million, or
23.2%, when compared to the same period during 2007. Interest income
increased $1.0 million, or 6.0%, combined with a decrease in interest expense of
$967,000, or 11.2%. Net interest rate spread increased to 3.22%
for the year ended December 31, 2008 from 2.82% for the same period in
2007. Average interest-earning assets increased 9.8%, to $315.3
million, for the year ended December 31, 2008 as compared to $287.1 million for
the year ended December 31, 2007. The yield on average interest earning assets
decreased 21 basis points to 5.87% compared to 6.08% for the same period in
2007. The increase in average interest earning assets is primarily
attributable to a $22.7 million increase in the average balance of the loan
portfolio and a $7.7 million increase in the average balance of security
investments. These increases were offset by a $2.2 million decrease
in the average balance of interest-earning deposits. Average
interest-bearing liabilities increased $26.1 million, while the cost of funds
decreased 63 basis points to 2.64% from 3.27% for the same period in
2007. The increase in the average balance of interest-bearing
liabilities resulted primarily from an $18.9 million, or 60%, increase in
average borrowed funds, combined with an increase in average deposits of $7.3
million, or 3%.
The
provision for loan losses for the year ended December 31, 2008 increased to
$820,000 from $365,000 for the same period in 2007. The increase in
the provision is reflective of the overall increase in loan portfolio volumes
and a portfolio that is more heavily concentrated in commercial lending
activities. In addition, the increased provision is a result of the
Company operating in the current heightened risk environment due to stressed
national economic conditions. The Company's ratio of allowance for
loan losses to period end loans has increased to 0.99% at December 31, 2008 from
0.76% at December 31, 2007. Nonperforming loans to period end loans
increased to 0.93% at December 31, 2008, compared to 0.71% at December 31,
2007. Non-accrual loans increased $732,000 as of December 31, 2008
when compared to December 31, 2007. The increase was centered in
commercial real estate and commercial loans. These accounts are
considered well collateralized, and several are supported by government
guarantees. Non-accrual loans as a percentage of total assets
decreased slightly from 0.77% in 2007 to 0.76% in 2008. The Company
does not anticipate any losses above the level of specific loss allowances that
have been established.
Non-interest
income, exclusive of net gains and losses from the sale of securities, loans and
foreclosed real estate, increased to $717,000 for the quarter ended December 31,
2008 compared to $712,000 for the same period in the prior year. The
increased in non-interest income for the quarter is attributable to a $58,000
increase in income from bank owned life insurance which was offset by a decrease
of $53,000 in service charges on deposit accounts.
Non-interest
income, exclusive of net gains and losses from the sale of securities, loans and
foreclosed real estate, increased to $2.8 million for the year ended December
31, 2008 compared to $2.6 million for the same period in the prior year. The
increase in non-interest income is primarily attributable to a $68,000 increase
in income from bank owned life insurance, a $31,000 increase in loan servicing
fees, a $29,000 increase in debit card interchange fees, and an $18,000 increase
in both other charges, commissions and fees and service charges on deposit
accounts.
Net gains
and losses on securities, loans and foreclosed real estate decreased $276,000 to
a net loss of $6,000 for the quarter ended December 31, 2008 as compared to a
net gain of $270,000 for the quarter ended December 31, 2007. The net
loss for the fourth quarter is a result of a combination of other than temporary
impairment on the Financial Institution Fund and the write down to market value
of Phoenix Companies stock holdings, offset by the gains on the sale of
foreclosed property and the AMF Large Cap Equity Fund capital gain
dividend.
Net gains
and losses on securities, loans and foreclosed real estate decreased $2.7
million, to a net loss of $2.2 million for the year ended December 31, 2008, as
compared to a net gain of $420,000 for the year ended December 31,
2007. The net loss is a result of recording a fourth quarter other
than temporary impairment charge on the Financial Institutions Fund along with a
third quarter other than temporary impairment charge of $875,000 relating to the
Company’s $1,000,000 holdings in a senior unsecured note issued by Lehman
Brothers Holdings Inc., which filed a Chapter 11 Bankruptcy petition on
September 15, 2008. In addition to this charge in the third quarter,
the Company also recorded other than temporary impairment charges of $690,000
relating to holdings in the AMF Large Cap Equity Fund and $269,000 relating to
holdings in the AMF Ultra Short Mortgage Fund. At December 31, 2008,
the total carrying value of the Company’s remaining investment in the AMF Large
Cap Equity Fund is approximately $2,192,000. The carrying value of
the AMF Ultra Short Mortgage Fund at December 31, 2008 is
$2,804,000. The AMF Large Cap Equity Fund and the AMF Ultra Short
Mortgage Fund have experienced additional declines in value since September 30,
2008. Management has determined that no additional charge for other
than temporary impairment is required at December 31, 2008.
Other
operating expenses increased $86,000 for the quarter ended December 31,
2008. Data processing expenses and other expenses increased $56,000
and $58,000 respectively. These increases were offset by decreases of
$21,000 in salaries and employee benefits and $16,000 in amortization of
intangible assets.
Operating
expenses increased 1% from the prior year to $9.9 million from $9.8
million. During 2008, other expenses, salary and employee benefits,
and building occupancy, increased $134,000, $78,000, and $68,000
respectively. The increase in salaries and employee benefits was
primarily due to merit based wage adjustments. The increase in building
occupancy was due to an increase in both depreciation and equipment
maintenance. The increase in other expenses was primarily due to
expenses related to other real estate owned and other non-recurring
expenses. Amortization expense decreased $182,000 as core deposit
intangibles, from a 2002 branch acquisition, became fully amortized in October
2007.
Government Sponsored
Programs
The board
of directors and management analyzed 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 is currently awaiting a response from the
treasury relating to its application. Treasury has yet to devise a
term sheet for mutually chartered companies.
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.
Statement Regarding Non-GAAP
Financial Measures
This
release contains supplemental financial information determined by methods other
than those in accordance with Accounting Principles Generally Accepted in the
United States of America (“GAAP”). The Company’s management believes
that such non-GAAP financial measures are useful to management and investors as
it enhances their ability to evaluate and compare the Company’s operating
results from period to period in a meaningful manner, as operating results
excluding other than temporary impairment charges on its investment security
holdings are essential in understanding the financial performance of the
Company, and is more representative of the basis that management utilizes to
monitor financial performance. Readers are cautioned that non-GAAP
measures should not be considered as an alternative to any measure of
performance as promulgated under GAAP, and should consider the impairment
charges recorded during 2008 in assessing the Company’s
performance. Non-GAAP measures have limitations as analytical tools,
and investors should not consider them in isolation or as a substitute for
analyzing the Company’s performance under GAAP, nor are they necessarily
comparable to non-GAAP measures presented by other companies.
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 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
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|
(dollars
in thousands except per share amounts)
|
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For
the three months
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For
the twelve months
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|
ended
December 31,
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|
ended
December 31,
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|
(Unaudited)
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|
(Unaudited)
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2008
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2007
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2008
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|
2007
|
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|
Condensed
Income Statement
|
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|
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|
|
|
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|
Interest
and dividend income
|
|
$ |
4,685 |
|
|
$ |
4,403 |
|
|
$ |
18,350 |
|
|
$ |
17,309 |
|
|
Interest
expense
|
|
|
1,840 |
|
|
|
2,138 |
|
|
|
7,675 |
|
|
|
8,642 |
|
|
Net
interest income
|
|
|
2,845 |
|
|
|
2,265 |
|
|
|
10,675 |
|
|
|
8,667 |
|
|
Provision
for loan losses
|
|
|
270 |
|
|
|
85 |
|
|
|
820 |
|
|
|
365 |
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|
Net
interest income after provision for loan losses
|
|
|
2,575 |
|
|
|
2,180 |
|
|
|
9,855 |
|
|
|
8,302 |
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|
Noninterest
income
|
|
|
717 |
|
|
|
712 |
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|
|
2,786 |
|
|
|
2,622 |
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|
Net
(losses) gains on securities, loans and
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|
|
|
|
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|
|
|
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foreclosed
real estate
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|
(6 |
) |
|
|
270 |
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|
|
(2,235 |
) |
|
|
420 |
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|
Noninterest
expense
|
|
|
2,527 |
|
|
|
2,441 |
|
|
|
9,935 |
|
|
|
9,838 |
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Income
before taxes
|
|
|
759 |
|
|
|
721 |
|
|
|
471 |
|
|
|
1,506 |
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Provision
for income taxes
|
|
|
185 |
|
|
|
236 |
|
|
|
103 |
|
|
|
384 |
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Net
Income
|
|
$ |
574 |
|
|
$ |
485 |
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$ |
368 |
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$ |
1,122 |
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Key
Earnings Ratios
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Return
on average assets
|
|
|
0.65 |
% |
|
|
0.62 |
% |
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|
0.11 |
% |
|
|
0.36 |
% |
|
Return
on average equity
|
|
|
11.07 |
% |
|
|
8.98 |
% |
|
|
1.70 |
% |
|
|
5.27 |
% |
|
Net
interest margin (tax equivalent)
|
|
|
3.53 |
% |
|
|
3.19 |
% |
|
|
3.43 |
% |
|
|
3.05 |
% |
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Share
and Per Share Data
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Basic
weighted average shares outstanding
|
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|
2,484,832 |
|
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|
2,483,541 |
|
|
|
2,484,167 |
|
|
|
2,483,051 |
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Basic
earnings per share
|
|
$ |
0.23 |
|
|
$ |
0.20 |
|
|
$ |
0.15 |
|
|
$ |
0.45 |
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|
Diluted
earnings per share
|
|
|
0.23 |
|
|
|
0.20 |
|
|
|
0.15 |
|
|
|
0.45 |
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|
Cash
dividends per share
|
|
|
0.1025 |
|
|
|
0.1025 |
|
|
|
0.410 |
|
|
|
0.410 |
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|
Book
value per share at December 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
7.97 |
|
|
|
8.75 |
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Reconciliation Table for Non-GAAP Financial
Measures
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For
the three
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|
|
|
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|
For
the twelve
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|
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|
|
|
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|
months
ended
|
|
|
|
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|
months
ended
|
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|
|
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|
|
December
31, 2008
|
|
|
|
|
|
|
December
31, 2008
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Net
Income
|
|
$ |
574,000 |
|
|
|
|
|
|
$ |
368,000 |
|
|
|
|
|
|
Other
than temporary impairment charges - investments
|
|
|
76,601 |
|
|
|
|
|
|
|
2,252,601 |
|
|
|
|
|
|
Related
tax benefit
|
|
|
- |
* |
|
|
|
|
|
|
(659,000 |
)* |
|
|
|
|
|
Core
earnings
|
|
$ |
650,601 |
|
|
|
|
|
|
$ |
1,961,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average assets
|
|
|
0.65 |
% |
|
|
|
|
|
|
0.11 |
% |
|
|
|
|
|
Other
than temporary impairment, net of tax benefit
|
|
|
0.09 |
% |
|
|
|
|
|
|
0.46 |
% |
|
|
|
|
|
Core
earnings return on average assets
|
|
|
0.74 |
% |
|
|
|
|
|
|
0.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on average equity
|
|
|
11.07 |
% |
|
|
|
|
|
|
1.70 |
% |
|
|
|
|
|
Other
than temporary impairment, net of tax benefit
|
|
|
1.43 |
% |
|
|
|
|
|
|
7.38 |
% |
|
|
|
|
|
Core
earnings return on average equity
|
|
|
12.50 |
% |
|
|
|
|
|
|
9.08 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$ |
0.23 |
|
|
|
|
|
|
$ |
0.15 |
|
|
|
|
|
|
Other
than temporary impairment, net of tax
|
|
|
0.03 |
|
|
|
|
|
|
|
0.64 |
|
|
|
|
|
|
Core
earnings, diluted earnings per share
|
|
$ |
0.26 |
|
|
|
|
|
|
$ |
0.79 |
|
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*
Net of deferred tax asset valuation allowances of $30,000 for three
month period and $242,000 for twelve month period.
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|
|
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|
|
|
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|
(Unaudited)
|
|
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|
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|
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|
December
31,
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
Selected
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$ |
351,026 |
|
|
$ |
320,691 |
|
|
$ |
301,382 |
|
|
|
|
|
|
Earning
assets
|
|
|
324,872 |
|
|
|
290,192 |
|
|
|
274,083 |
|
|
|
|
|
|
Total
loans
|
|
|
249,872 |
|
|
|
222,749 |
|
|
|
203,209 |
|
|
|
|
|
|
Deposits
|
|
|
269,438 |
|
|
|
251,085 |
|
|
|
245,585 |
|
|
|
|
|
|
Borrowed
Funds
|
|
|
51,975 |
|
|
|
38,410 |
|
|
|
26,360 |
|
|
|
|
|
|
Trust
Preferred Debt
|
|
|
5,155 |
|
|
|
5,155 |
|
|
|
5,155 |
|
|
|
|
|
|
Shareholders'
equity
|
|
|
19,793 |
|
|
|
21,704 |
|
|
|
20,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loan charge-offs (annualized) to average loans
|
|
|
0.02 |
% |
|
|
0.08 |
% |
|
|
0.11 |
% |
|
|
|
|
|
Allowance
for loan losses to period end loans
|
|
|
0.99 |
% |
|
|
0.76 |
% |
|
|
0.74 |
% |
|
|
|
|
|
Allowance
for loan losses to nonperforming loans
|
|
|
106.41 |
% |
|
|
107.04 |
% |
|
|
127.65 |
% |
|
|
|
|
|
Nonperforming
loans to period end loans
|
|
|
0.93 |
% |
|
|
0.71 |
% |
|
|
0.57 |
% |
|
|
|
|
|
Nonperforming
assets to total assets
|
|
|
0.76 |
% |
|
|
0.77 |
% |
|
|
0.54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|