SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTER ENDED MARCH 31, 2004
SEC Exchange Act No. 000-23601
Pathfinder Bancorp, Inc.
(Exact name of Company as specified in its charter)
Federal
(State or jurisdiction of incorporation or organization)
16-1540137
(I.R.S. Employer Identification Number)
214 W. 1st Street
Oswego, New York
- ----------------------------------- 13126
--------------
(Address of principal executive office) (Zip Code)
Company's telephone number, including area code: (315) 343-0057
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: There were 2,448,132 shares
of the Company's common stock outstanding as of May 6, 2004.
PATHFINDER BANCORP, INC.
INDEX
PART 1 FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Condition 1
Consolidated Statements of Income 2
Consolidated Statements of Shareholders' Equity 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial 8-14
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosure about Market 15
Risk
Item 4. Control and Procedures 16
PART II OTHER INFORMATION 17
Item 1. Legal proceedings
Item 2. Change in securities, Use of Proceeds and Issuer
Purchases of Equity Securities
Item 3. Defaults upon senior securities
Item 4. Submission of matters to a vote of security holders
Item 5. Other information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PATHFINDER BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
MARCH 31, 2004 (UNAUDITED) AND DECEMBER 31, 2003
March 31, December 31,
ASSETS 2004 2003
- --------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Cash and due from banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,976 $ 5,803
Interest earning deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,406 2,911
- --------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,382 8,714
Investment securities, at fair value . . . . . . . . . . . . . . . . . . . . . . . . . . 76,079 57,559
Federal Home Loan Bank stock, at cost. . . . . . . . . . . . . . . . . . . . . . . . . . 2,048 2,048
Mortgage loans held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,242 3,520
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186,646 188,717
Less: Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,775 1,715
- --------------------------------------------------------------------------------------------------------------------
Loans receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184,871 187,002
Premises and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,584 6,650
Accrued interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,436 1,273
Foreclosed real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 202
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,840 3,840
Intangible asset, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 794 850
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,777 6,282
- --------------------------------------------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 302,316 $ 277,940
=====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------
Deposits:
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 213,544 $ 191,104
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,407 15,790
- --------------------------------------------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230,951 206,894
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100 2,100
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,860 38,860
Junior subordinated debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,155 -
Company obligated mandatorily redeemable preferred securities of subsidiary, Pathfinder
Statutory Trust I, holding solely junior subordinated debentures of the Company . . . . - 5,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,014 3,301
- --------------------------------------------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,080 256,155
Shareholders' equity:
Preferred stock, authorized shares 1,000,000; no shares issued or outstanding
Common stock, par value $.01; authorized 10,000,000 shares;
2,935,419 and 2,919,386 shares issued; and 2,448,132 and 2,432,099
shares outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . 29 29
Additional paid in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,376 7,225
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,825 20,747
Accumulated other comprehensive income. . . . . . . . . . . . . . . . . . . . . . . . 575 364
Unearned ESOP shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (67) (78)
Treasury Stock, at cost; 487,287 shares . . . . . . . . . . . . . . . . . . . . . . . (6,502) (6,502)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,236 21,785
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . . . . . . . . . . . . . . . . . . . . $ 302,316 $ 277,940
=====================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
1
PATHFINDER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
For the three For the three
months ended months ended
March 31, 2004 March 31, 2003
- -------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,990 $ 3,266
Debt securities:
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 472 607
Tax-exempt . . . . . . . . . . . . . . . . . . . . . . . . . . 48 61
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 36 55
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 12
- -------------------------------------------------------------------------------------------------
Total interest income . . . . . . . . . . . . . . . . . 3,561 4,001
INTEREST EXPENSE:
Interest on deposits . . . . . . . . . . . . . . . . . . . . 852 1,027
Interst on short-term borrowings . . . . . . . . . . . . . . 9 3
Interest on long-term borrowings . . . . . . . . . . . . . . 496 570
- -------------------------------------------------------------------------------------------------
Total interest expense. . . . . . . . . . . . . . . . . 1,357 1,600
- -------------------------------------------------------------------------------------------------
Net interest income. . . . . . . . . . . . . . . . . 2,204 2,401
Provision for loan losses. . . . . . . . . . . . . . . . . . 188 106
- -------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses. 2,016 2,295
- -------------------------------------------------------------------------------------------------
OTHER INCOME:
Service charges on deposit accounts. . . . . . . . . . . . . 235 161
Loan servicing fees. . . . . . . . . . . . . . . . . . . . . 41 50
Increase in value of bank owned life insurance . . . . . . . 48 43
Net gain on securities . . . . . . . . . . . . . . . . . . . 154 165
Net gain(loss) on loans/real estate. . . . . . . . . . . . . 80 42
Other charges, commissions & fees. . . . . . . . . . . . . . 120 102
- -------------------------------------------------------------------------------------------------
Total other income . . . . . . . . . . . . . . . . . 678 563
- -------------------------------------------------------------------------------------------------
OTHER EXPENSES:
Salaries and employee benefits . . . . . . . . . . . . . . . 1,203 1,113
Building occupancy . . . . . . . . . . . . . . . . . . . . . 277 257
Data processing expenses . . . . . . . . . . . . . . . . . . 225 198
Professional and other services. . . . . . . . . . . . . . . 146 163
Amortization of intangible asset . . . . . . . . . . . . . . 56 56
Other expenses . . . . . . . . . . . . . . . . . . . . . . . 343 414
- -------------------------------------------------------------------------------------------------
Total other expenses . . . . . . . . . . . . . . . . 2,250 2,201
- -------------------------------------------------------------------------------------------------
Income before income taxes . . . . . . . . . . . . . . . . . . 444 657
Provision for income taxes . . . . . . . . . . . . . . . . . . 121 164
- -------------------------------------------------------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 323 $ 493
=================================================================================================
NET INCOME PER SHARE - BASIC. . . . . . . . . . . . . . . $ 0.13 $ 0.20
=================================================================================================
NET INCOME PER SHARE - DILUTED. . . . . . . . . . . . . . $ 0.13 $ 0.20
=================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
2
PATHFINDER BANCORP, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2003
(unaudited)
Accumulated
Additional Other Com-
Common Stock Issued Paid in Retained prehensive
Shares Amount Capital Earnings Income
-------------------- ----------- --------- ----------- -------
(Dollars in thousands, except per share data)
BALANCE, DECEMBER 31, 2003. . . . . . . . . . 2,919 $ 29 $ 7,225 $ 20,747 $ 364
Comprehensive income
Net income. . . . . . . . . . . . . . . . . . 323
Other comprehensive income, net of tax:
Unrealized net losses on securities . . . . . 211
Total Comprehensive income
ESOP shares earned. . . . . . . . . . . . . . 26
Stock option exercised. . . . . . . . . . . . 16 - 125
Dividends declared ($.10 per share) . . . . . (245)
- -----------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2004 . . . . . . . . . . . 2,935 $ 29 $ 7,376 $ 20,825 $ 575
=================================================================================================================
BALANCE, DECEMBER 31, 2002. . . . . . . . . . 2,915 $ 29 $ 7,114 $ 19,746 $ 281
Net income. . . . . . . . . . . . . . . . . . 493
Other comprehensive income, net of tax:
Unrealized net losses on securities . . . . . (138)
Total Comprehensive income
ESOP shares earned. . . . . . . . . . . . . . 16
Treasury stock purchased
Dividends declared ($.10 per share) . . . . . (242)
- -----------------------------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 2003 . . . . . . . . . . . 2,915 $ 29 $ 7,130 $ 19,997 $ 143
=================================================================================================================
Unearned
ESOP Treasury
Shares Stock Total
- --------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2003 . . . . . . . $ (78) $(6,502) $21,785
Comprehensive income
Net income . . . . . . . . . . . . . . . 323
Other comprehensive income, net of tax:
Unrealized net losses on securities. . . 211
____
Total Comprehensive income . . . . . . . 534
ESOP shares earned . . . . . . . . . . . 11 37
Stock option exercised . . . . . . . . . 125
Dividends declared ($.10 per share). . . (245)
- --------------------------------------------------------------------------------
BALANCE, MARCH 31, 2004. . . . . . . . . $ (67) $(6,502) $22,236
================================================================================
BALANCE, DECEMBER 31, 2002 . . . . . . . $ (125) $(3,815) $23,230
Net income . . . . . . . . . . . . . . . 493
Other comprehensive income, net of tax:
Unrealized net losses on securities. . . (138)
_____
Total Comprehensive income . . . . . . . 355
ESOP shares earned . . . . . . . . . . . 12 28
Treasury stock purchased . . . . . . (2,462) (2,462)
Dividends declared ($.10 per share). . . (242)
- --------------------------------------------------------------------------------
BALANCE, MARCH 31, 2003. . . . . . . . . $ (113) $(6,277) $20,909
================================================================================
The accompanying notes are an integral part of the consolidated financial
statements
3
PATHFINDER BANCORP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
March 31, March 31,
2004 2003
- --------------------------------------------------------------------------------
(Dollars in thousands)
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 323 $ 493
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses. . . . . . . . . . . . . . . 188 106
ESOP and other stock-based compensation earned . . . . 37 28
Deferred income tax expense (benefit). . . . . . . . . (18) 61
Proceeds from sale of loans. . . . . . . . . . . . . . 4,662 2,610
Originations of loans held-for-sale. . . . . . . . . . (3,334) (2,184)
Realized (gain) loss on:
Sale of real estate loans through foreclosure. . . . (30) 6
Loans. . . . . . . . . . . . . . . . . . . . . . . . (50) (48)
Available-for-sale investment securities . . . . . . (154) (165)
Depreciation . . . . . . . . . . . . . . . . . . . . . 144 121
Amortization of intangible . . . . . . . . . . . . . . 56 56
Amortization of deferred financing costs . . . . . . . 8 8
Amortization of mortgage servicing rights. . . . . . . 41 26
Increase in surrender value of life insurance. . . . . (48) (43)
Net amortization of premiums on investment securities. 64 28
Increase in interest receivable. . . . . . . . . . . . (163) (135)
Net change in other assets and liabilities . . . . . . (810) (283)
- ----------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . . 916 685
- ----------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of investment securities available-for-sale . (23,812) (6,749)
Proceeds from maturities and principal reductions of
investment securities available-for-sale . . . . . . 1,814 5,456
Proceeds from sale:
Real estate acquired through foreclosure . . . . . . 96 54
Available-for-sale investment securities . . . . . . 3,920 2,031
Purchase of life insurance . . . . . . . . . . . . . . (1,100) -
Net decrease (increase) in loans . . . . . . . . . . . 1,816 (3,057)
Purchase of premises and equipment . . . . . . . . . . (78) (155)
- ----------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES. . . . . . . . . . (17,344) (2,420)
- ----------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in demand deposits, NOW accounts
savings accounts, money market deposit accounts
and escrow deposits. . . . . . . . . . . . . . . . . 25,840 4,048
Net (decrease) increase in time deposits . . . . . . . (1,783) 2,876
Net repayments from short term borrowings. . . . . . . 1,000 (700)
Payments on long-term borrowings . . . . . . . . . . . (1,000) (1,000)
Proceeds from long-term borrowings . . . . . . . . . . - 700
Proceeds from exercise of stock options. . . . . . . . 125 -
Cash dividends paid. . . . . . . . . . . . . . . . . . (86) (82)
Treasury stock purchased . . . . . . . . . . . . . . . - (2,462)
- ----------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . 24,096 3,380
- ----------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . 7,668 1,645
Cash and cash equivalents at beginning of period. . . . 8,714 13,740
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . $ 16,382 $ 15,385
==================================================================================
The accompanying notes are an integral part of the consolidated financial
statements
4
PATHFINDER BANCORP, INC.
Notes to Financial Statements
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements were prepared in accordance with
the instructions for Form 10-Q and Regulation S-X and, therefore, do not include
information for footnotes necessary for a complete presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. The following material under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is written with the presumption that the users of the interim
financial statements have read, or have access to, the Company's latest audited
financial statements and notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations as of December 31,
2003 and for the three year period then ended. Therefore, only material changes
in financial condition and results of operations are discussed in the remainder
of part 1.
Operating results for the three months ended March 31, 2004 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2004.
(2) EARNINGS PER SHARE
Basic earnings per share have been computed by dividing net income by the
weighted average number of common shares outstanding throughout the three months
ended March 31, 2004 and 2003, using 2,424,057 and 2,446,387 weighted average
common shares outstanding. Diluted earnings per share for the three month
period ending March 31, 2004 and 2003 have been computed using 2,475,687and
2,490,657 weighted average common shares outstanding. Diluted earnings per
share gives effect to weighted average shares that would be outstanding assuming
the exercise of issued stock options using the treasury stock method.
(3) STOCK-BASED COMPENSATION
The Company's stock-based compensation plan is accounted for based on the
intrinsic value method set forth in Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees", and related provisions.
Compensation expense for employee stock options is generally not recognized if
the exercise price of the option equals or exceeds the fair value of the stock
on the date of the grant. Compensation expense for restricted share awards is
ratably recognized over the period of vesting, usually the restricted period,
based on the fair value of the stock on the grant date.
As of March 31, 2004, the stock options previously issued by the Company were
fully vested. As such, there was no effect on pro forma net income for the
three month period ended March 31, 2004. The following table illustrates the
effect on net income and earnings per share for the period ended March 31, 2003,
as if the Black-Scholes fair value method described in SFAS No. 123, "Accounting
for Stock-Based Compensation", as amended, had been applied to the Company's
stock-based compensation plan:
5
For the quarter ended March 31, 2004
(In thousands, except per share data)
- ----------------------------------------------------------------------
Net Income:
As reported . . . . . . . . . . . . . . . . . $493
Less: Total stock-based employee compensation
expense determined under Black-Scholes option
pricing model, net of tax effect. . . . . . . 7
- --------------------------------------------- --------
Pro forma net income. . . . . . . . . . . . . $486
For the quarter ended March 31, 2004
Earnings per share: Basic Diluted
- -------------------------------------------
As reported . . . . $ 0.20 $ 0.20
Pro forma . . . . . $ 0.20 $ 0.20
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. Therefore, the
foregoing pro forma results are not likely to be representative of the effects
of reported net income of future periods due to additional years of vesting.
Since changes in the subjective input assumptions can materially affect the fair
value estimates, the existing model, in management's opinion does not
necessarily provide a single reliable measure of the fair value of its stock
options. In addition, the pro forma effect on reported net income and earnings
per share for the periods presented should not be considered representative of
the pro forma effects on reported net income and earnings per share for future
periods.
(4) RECLASSIFICATIONS
Certain prior period information has been reclassified to conform to the current
period's presentation. These reclassifications had no affect on net income as
previously reported.
(5) PENSION BENEFITS
The composition of net periodic benefit plan cost for the three months ended
March 31, is as follows:
PENSION BENEFITS
- -----------------------------------------------
2004 2003
- -----------------------------------------------
(In thousands)
Service cost. . . . . . . . . . $ 43 $ 38
Interest cost . . . . . . . . . 52 50
Expected return on plan assets. (63) (57)
Amortization of net losses. . . 24 26
- -----------------------------------------------
Net periodic benefit cost . . . $ 56 $ 57
================================================
The Company previously disclosed in its financial statements for the year ended
December 31, 2003, that it expected to contribute $250,000 to its pension plan
in 2004. As of March 31, 2004, no contributions have been made. The Company
presently anticipates contributing $192,000 to fund its pension plan in 2004.
The reduction in the anticipated contribution resulted from a reduction in the
plan's accrual formula effective May 1, 2004.
(6) DIVIDEND RESTRICTIONS
The Company maintains a restricted capital account with a $887,000 balance,
representing Pathfinder Bancorp, M.H.C.'s portion of dividends waived as of
March 31, 2004.
6
(7) COMPREHENSIVE INCOME
The components of other comprehensive income (loss) and related tax effects for
the three month period ended March 30, 2004 and 2003 are as follows:
For the three months
ended March 31,
- -------------------------------------------------------
2004 2003
- -------------------------------------------------------
(In thousands)
Gross change in unrealized gains on
securities available for sale. . . . $ 506 $ (64)
Reclassification adjustment for gains
included in net income . . . . . . . (154) (165)
Tax effect . . . . . . . . . . . . . . (141) 91
- -------------------------------------------------------
Net of tax amount. . . . . . . . . . . $ 211 $(138)
========================================================
(8) GUARANTEES
The Company does not issue any guarantees that would require liability
recognition or disclosure, other than its standby letters of credit. Standby
letters of credit written are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Generally, all
letters of credit, when issued have expiration dates within one year. The
credit risk involved in issuing letters of credit is essentially the same as
those that are involved in extending loan facilities to customers. The Company,
generally, holds collateral and/or personal guarantees supporting these
commitments. The Company had $665,000 of standby letters of credit as of March
31, 2004. Management believes that the proceeds obtained through a liquidation
of collateral and the enforcement of guarantees would be sufficient to cover the
potential amount of future payment required under the corresponding guarantees.
The current amount of the liability as of March 31, 2004 for guarantees under
standby letters of credit issued is not material.
(9) NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51" which was revised in December 2003. This
Interpretation provides guidance for the consolidation of variable interest
entities (VIEs). Pathfinder Statutory Trust I qualifies as a variable interest
entity under FIN 46. Pathfinder Statutory Trust I issued mandatorily redeemable
preferred securities (Trust Preferred Securities) to third-party investors and
loaned the proceeds to the Company. Pathfinder Statutory Trust I holds, as it
sole asset, subordinated debentures issued by the Company.
FIN 46 required the Company to deconsolidate Pathfinder Statutory Trust I from
the consolidated financial statements as of March 31, 2004. There has been no
restatement of prior periods. The impact of this deconsolidation was to increase
junior subordinated debentures by $5,155,000 and reduce the mandatory redeemable
preferred securities line item by $5,000,000, which represented the trust
preferred securities of the trust. The Company's equity interest in the trust
subsidiary of $155,000, which had previously been eliminated in consolidation,
is now reported in "Other assets" as of March 31, 2004. For regulatory
reporting purposes, the Federal Reserve Board has indicated that the preferred
securities will continue to qualify as Tier 1 Capital subject to previously
specified limitations, until further notice. If regulators make a determination
that Trust Preferred Securities can no longer be considered in regulatory
capital, the securities become callable and the Company may redeem them. The
adoption of FIN 46 did not have an impact on the Company's results of operations
or liquidity.
7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Throughout the Management's Discussion and Analysis ("MD&A") the term, "the
Company", refers to the consolidated entity of Pathfinder Bancorp, Inc.
Pathfinder Bank and Pathfinder Statutory Trust I are wholly owned subsidiaries
of Pathfinder Bancorp, Inc. Pathfinder Commercial Bank, Pathfinder REIT, Inc.
and Whispering Oaks Development Corp. represent wholly owned subsidiaries of
Pathfinder Bank. Pathfinder Statutory Trust I is not included in the
consolidated financial statements for the quarter ended March 31, 2004. At
March 31, 2004, Pathfinder Bancorp, M.H.C., the Company's mutual holding company
parent, whose activities are not included in the M.D.&A held 64.7% of the
Company's common stock and the public held 35.3%.
The following discussion reviews the Company's financial condition at March 31,
2004 and the results of operations for the three months ended March 31, 2004 and
March 31, 2003.
This Quarterly Report contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties, including, among
other things, changes in economic conditions in the Company's market area,
changes in policies by regulatory agencies, fluctuations in interest rates,
demand for loans in the Company's market areas and competition, that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. The Company wishes to advise readers that the factors listed
above could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
The Company does not undertake, and specifically declines any obligation, to
publicly release the result of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
The Company's net income is primarily dependent on its net interest income,
which is the difference between interest income earned on its investments in
mortgage loans, investment securities and other loans, and its cost of funds
consisting of interest paid on deposits and borrowed funds. The Company's net
income is also affected by its provision for loan losses, as well as by the
amount of noninterest income, including income from fees and service charges,
net gains and losses on sales of securities, loans and foreclosed real estate,
and non interest expense such as employee compensation and benefits, occupancy
and equipment costs, data processing and income taxes. Earnings of the Company
also are affected significantly by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities, which events are beyond the control of the Company.
In particular, the general level of market rates tends to be highly cyclical.
8
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company's consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States and follow
practices within the banking industry. Application of these principles requires
management to make estimates, assumptions and judgments that affect the amounts
reported in the financial statements and accompanying notes. These estimates,
assumptions and judgments are based on information available as of the date of
the financial statements; accordingly, as this information changes, the
financial statements could reflect different estimates, assumptions and
judgments. Certain policies inherently have a greater reliance on the use of
estimates, assumptions and judgments and as such have a greater possibility of
producing results that could be materially different than originally reported.
Estimates, assumptions and judgments are necessary when assets and liabilities
are required to be recorded at fair value or when an asset or liability needs to
be recorded contingent upon a future event. Carrying assets and liabilities at
fair value inherently results in more financial statement volatility. The fair
values and information used to record valuation adjustments for certain assets
and liabilities are based on quoted market prices or are provided by other
third-party sources, when available. When third party information is not
available, valuation adjustments are estimated in good faith by management.
The most significant accounting policies followed by the Company are presented
in Note 1 to the consolidated financial statements included in the 2003 Annual
Report on Form 10-K ("the Consolidated Financial Statements"). These policies,
along with the disclosures presented in the other financial statement notes and
in this discussion, provide information on how significant assets and
liabilities are valued in the financial statements and how those values are
determined. Based on the valuation techniques used and the sensitivity of
financial statement amounts to the methods, assumptions and estimates underlying
those amounts, management has identified the determination of the allowance for
loan losses to be the accounting area that requires the most subjective and
complex judgments, and as such could be the most subject to revision as new
information becomes available.
The allowance for loan losses represents management's estimate of probable loan
losses inherent in the loan portfolio. Determining the amount of the allowance
for loan losses is considered a critical accounting estimate because it requires
significant judgment and the use of estimates related to the amount and timing
of expected future cash flows on impaired loans, estimated losses on pools of
homogeneous loans based on historical loss experience, and consideration of
current economic trends and conditions, all of which may be susceptible to
significant change. The loan portfolio also represents the largest asset type
on the consolidated balance sheet. Note 1 to the Consolidated Financial
Statements describes the methodology used to determine the allowance for loan
losses, and a discussion of the factors driving changes in the amount of the
allowance for loan losses is included in this report.
The Company carries all of its investments at fair value with any unrealized
gains or losses reported net of tax as an adjustment to shareholders' equity.
Based on management's assessment, at March 31, 2004, the Company did not hold
any security that had a fair value decline that is currently expected to be
other than temporary. Consequently, any declines in a specific security's fair
value below amortized cost have not been provided for in the income statement.
The Company's ability to fully realize the value of its investment in various
securities, including corporate debt securities, is dependent on the underlying
creditworthiness of the issuing organization.
RESULTS OF OPERATIONS
Net income for the first quarter of 2004 was $323,000, a decrease of $171,000,
or 35%, as compared to net income of $493,000 for the same period in 2003.
Basic earnings per share decreased to $0.13 per share for the quarter ended
March 31, 2004 from $0.20 for the quarter ended March 31, 2003. The return on
average assets and return on shareholder's equity were 0.45% and 5.83%,
respectively, for the three months ended March 31, 2004, compared with 0.70% and
9.42%, respectively, for the first quarter of 2003. The decrease in net income
for the first quarter of 2004 when compared to the prior period primarily
9
resulted from a decrease in net interest income of $198,000 and an increase in
the provision for loan losses of $82,000, partially offset by a $115,000
increase in noninterest income. Management expects continued margin compression
to challenge earnings growth over the near term.
NET INTEREST INCOME
Net interest income is the Company's primary source of operating income for
payment of operating expenses and providing for possible loan losses. It is the
amount by which interest earned on interest-earning deposits, loans and
investment securities, exceeds the interest paid on deposits and other
interest-bearing liabilities. Changes in net interest income and net interest
margin ratio result from the interaction between the volume and composition of
earning assets, interest-bearing liabilities, related yields and associated
funding costs.
Net interest income, on a tax-equivalent basis, decreased $213,000, or 9%, to
$2.2 million for the three months ending March 31, 2004, as compared to the same
period during 2003. The Company's net interest margin ratio for the first
quarter of 2004 decreased to 3.36% from 3.84% for the same quarter in 2003. The
decline in net interest income is attributable to lower market interest rates
which decreased earning asset yields to 5.41% from 6.36% when compared to the
same period during 2003. Average interest-earning assets increased 4% to
$264.7 million at March 31, 2004 as compared to $254.0 million at March 31,
2003. The increase in average earning assets is primarily attributable to a
$5.3 million increase in net loans receivable and a $5.0 million increase in
investment securities. Average interest-bearing liabilities increased $8.5
million, while the cost of funds decreased 49 basis points to 2.19% from 2.68%
for the same period in 2003. The increase in the average balance of
interest-bearing liabilities resulted primarily from a $10.3 million growth in
average deposits, primarily in money management accounts. The growth in
deposits primarily resulted from the Company's focus on attracting new
municipal deposit customers.
INTEREST INCOME
Total interest income for the quarter ended March 31, 2004 decreased $441,000,
or 11%, to $3.6 million from $4.0 million at the quarter ended March 31, 2003.
Average loans increased $5.3 million, with yields declining 77 basis points to
6.29% for the first quarter of 2004. Average commercial loans increased, and
experienced a decline in the average tax-equivalent yield of 179 basis points,
to 4.92% from 6.71%, in 2003. The decrease in the yield on commercial loans was
affected, in part, by the offering of short-term notes to municipalities
beginning in 2003. The average balance of loans to municipal entities was $3.7
million, having a tax-equivalent yield of 2.36%. The Company's residential
mortgage loan portfolio increased $1.8 million, or 1%, when comparing the first
quarter of 2004 to the same period in 2003. The average yield on the
residential mortgage loan portfolio decreased 63 basis points to 6.12% in 2004
from 6.75% in 2003. New loans were originated at lower rates than in the prior
period and a large volume of existing mortgages had their rates modified
downward or were refinanced at lower rates. An increase in the average balance
of consumer loans of $1.3 million, or 9%, resulted from an increase in home
equity loans. The average yield declined 87 basis points, to 6.99% from 7.86% in
2003.
Average investment securities (taxable and tax-exempt) in 2004 increased by $5.0
million, with a decrease in tax-equivalent interest income from investments of
$190,000, or 25%, compared to 2003. The average tax-equivalent yield of the
portfolio declined 150 basis points, to 3.42% from 4.92%. The increase in the
average balance of investment securities is reflective of the expanded deposit
growth with local municipalities.
INTEREST EXPENSE
Total interest expense decreased $243,000, or 15%, to $1.4 million for the first
quarter of 2004, from $1.6 million for the same quarter in 2003. Interest
expense on deposits decreased $175,000, or 17%, for the quarter ended March 31,
2004 when compared to the same period of 2003, as lower interest rates favorably
impacted the average rate paid on deposits, reducing it 46 basis points to 1.69%
in 2004 from 2.15% in 2003. The decrease in the cost of deposits was partially
10
offset by an increase in the average deposit balance to $201.5 million in 2004,
from $191.2 million for the same period in 2003. In addition to the decrease in
the cost of deposits, interest expense on borrowings also decreased by $68,000,
or 12%, from the prior period.
PROVISION FOR LOAN LOSSES
The provision for loans losses was $188,000 for the first quarter of 2004 as
compared to $106,000 for the same period in 2003. The increase in the provision
for the quarter primarily resulted from an increase in commercial charge-offs
for the period.
NONINTEREST INCOME
The Company's noninterest income is primarily comprised of fees on deposit
account balances and transactions, loan servicing, commissions, and net gains on
securities, loans and foreclosed real estate.
The following table sets forth certain information on noninterest income for the
quarters indicated:
For the Quarter Ended
- ----------------------------------------------------------------------
March 31, March 31,
2004 2003
- ----------------------------------------------------------------------
(In thousands)
Service charges on deposit accounts. . . . . . . . $235 $161
Loan servicing fees. . . . . . . . . . . . . . . . 41 50
Bank owned life insurance. . . . . . . . . . . . . 48 43
Net gains on sale of loans/foreclosed real estate. 80 42
Other operating income . . . . . . . . . . . . . . 120 102
- ----------------------------------------------------------------------
Core noninterest income. . . . . . . . . . . . . . 524 398
Net gains on sales of investment securities. . . . 154 165
- ----------------------------------------------------------------------
Total noninterest income . . . . . . . . . . . . . $678 $563
======================================================================
For the comparable periods, noninterest income increased 20%, as a result of a
32% increase in core noninterest income, slightly offset by a 7% decrease in the
non-core item, net gains on sales of investment securities. The increase in the
number of deposit accounts, the introduction of new services to customers and
elimination of consulting fees associated with those new services, primarily
accounted for the 46% increase in service charges on deposit accounts. Net
gains on the sale of loans/foreclosed real estate increased 91%, primarily
resulting from a net gain on the sale of foreclosed real estate of $30,000 and a
$5,000 increase in the net gain recognized on the sale of loans to the secondary
market. The increase in other operating income was primarily due to increased
commissions associated with higher volume of sales of investment products and an
increase in debit card fees. Investment security net gains for 2004 primarily
consisted of gains associated with the sale of a corporate debt security.
Noninterest Expense
The following table sets forth certain information on noninterest expense for
the quarters indicated:
For the Quarter Ended
- -----------------------------------------------------------
March 31, March 31,
(In thousands) 2004 2003
- -----------------------------------------------------------
Salaries and employee benefits . . $ 1,203 $ 1,113
Building occupancy . . . . . . . . 277 257
Data processing. . . . . . . . . . 225 198
Professional and other services. . 146 163
Amortization of intangible assets. 56 56
Other operating. . . . . . . . . . 343 414
- -----------------------------------------------------------
Total noninterest expense. . . . . $ 2,250 $ 2,201
===========================================================
11
Noninterest expenses increased $49,000, or 2%, for the three months ended March
31, 2004 when compared to the same period in 2003. Salaries and employee
benefits increased 8% resulting from increased pension and health insurance
costs and overall personnel costs due to increased staffing. The Company had 103
full time equivalent employees at March 31, 2004 compared to 97 at March 31,
2003. Building occupancy expenses increased 8% resulting primarily from
depreciation expenses associated with the new Fulton branch which opened in
August of 2003, and higher than normal snow removal costs for the first quarter
of 2004. The 14% increase in data processing charges was due to increased ATM
servicing charges, the replenishment of the ATM debit card inventory and
increased check processing charges incurred by the Commercial Bank. The
decrease in both professional and other services and other operating expenses
resulted primarily from a reduction in foreclosed real estate expenses and a
reduction in legal expenses associated with those real estate properties.
INCOME TAX EXPENSE
Income taxes decreased $43,000, or 26%, for the quarter ended March 31, 2004 as
compared to the same period in 2003. The decrease was attributable to a
$214,000 decrease in the Company's pre-tax income. The effective tax rate
increased to 27% from 25% compared to the same period in the prior year
primarily resulting from a decrease in tax-exempt interest income.
CHANGES IN FINANCIAL CONDITION
ASSETS
Total assets increased approximately $24.4 million, or 9%, to $302.3 million at
March 31, 2004, from $277.9 million at December 31, 2003. The increase in total
assets was primarily the result of an increase in investment securities of $18.5
million, or 32%, a $7.7 million, or 88%, increase in cash and cash equivalents
and a $1.5 million, or 24%, increase in other assets. These increases were
partially offset by a decrease in net loans of $2.1 million, or 1%. The growth
in investment securities was funded by the increase in municipal deposits. The
increase in cash and cash equivalents was primarily the result of the increased
deposit levels and loans sales from the secondary market. The excess liquidity
is expected to be invested primarily in the commercial real estate portfolio and
investment securities. The increase in other assets was due to an increase in
the cash value of life insurance resulting from the funding of the life
insurance policies relating to the new executives and directors deferred
compensation plan.
LIABILITIES
Total liabilities increased $24.9 million, or 10%, to $280.1 million at March
31, 2004 from $256.2 million at December 31, 2003. The increase in liabilities
is primarily due to a $22.4 million growth in interest-bearing deposits and a
$1.6 million growth in noninterest-bearing deposits. The growth in deposits
primarily resulted from the Company's focus on attracting new municipal deposit
customers.
12
LOAN AND ASSET QUALITY AND ALLOWANCE FOR LOAN LOSSES
The following table represents information concerning the aggregate amount of
nonperforming assets:
For the Period Ending
March 31, Dec. 31, March 31,
(In thousands) 2004 2003 2003
- ----------------------------------------------------------------------------------------
Nonaccrual loans:
Commercial . . . . . . . . . . . . . . . . . . . . $ 1,955 $ 1,677 $ 594
Consumer . . . . . . . . . . . . . . . . . . . . . 161 172 193
Real estate - Construction. . . . . . . . . . . . 0 270 0
Mortgage. . . . . . . . . . . 849 873 803
- ----------------------------------------------------------------------------------------
Total nonaccrual loans . . . . . . . . . . . . . . $ 2,965 $ 2,992 $ 1,590
Loans past due 90 days or more and still accruing. 0 0 0
- ----------------------------------------------------------------------------------------
Total non-performing loans . . . . . . . . . . . . $ 2,965 $ 2,992 $ 1,590
Foreclosed real estate . . . . . . . . . . . . . . 263 202 1,459
- ----------------------------------------------------------------------------------------
Total non-performing assets. . . . . . . . . . . . $ 3,228 $ 3,194 $ 3,049
- ----------------------------------------------------------------------------------------
Non-performing loans to total loans. . . . . . . . 1.57% 1.59% 0.85%
Non-performing assets to total assets. . . . . . . 1.04% 1.15% 1.08%
- ----------------------------------------------------------------------------------------
Total nonperforming loans at March 31, 2004 were $3.0 million, or 1.57%, of
total loans as compared to $3.0 million, or 1.59%, of total loans at December
31, 2003. Foreclosed real estate increased to $263,000 at March 31, 2004
compared to $202,000 at December 31, 2003. Nonperforming loans continue to be
addressed primarily through foreclosure proceedings. Management believes that
adequate reserves exist for any potential losses that may occur from the
remediation process.
The allowance for loan losses at March 31, 2004 was $1.8 million, or 0.95% of
period end loans, compared to $1.7 million, or 0.91% of period end loans, at
December 31, 2003.
CAPITAL
Shareholders' equity increased $451,000 million, or 2%, to $22.2 million at
March 31, 2004. The increase in shareholders' equity primarily resulted from an
$151,000 increase in additional paid in capital, a $78,000 increase in retained
earnings and a $211,000 increase in accumulated other comprehensive income. The
Company added $323,000 to retained earnings through net income and returned
$245,000 to its shareholders in the form of cash dividends. The Company's
mutual holding company parent, Pathfinder Bancorp, M.H.C, accepted the dividend
for the quarter ended March 31, 2004 to meet the cash flow needs of the mutual
holding company.
Risk-based capital provides the basis for which all banks are evaluated in terms
of capital adequacy. Capital adequacy is evaluated primarily by the use of
ratios which measure capital against total assets, as well as against total
assets that are weighted based on defined risk characteristics. The Company's
goal is to maintain a strong capital position, consistent with the risk profile
of its subsidiary banks that supports growth and expansion activities while at
the same time exceeding regulatory standards. At March 31, 2004, Pathfinder
Bank exceeded all regulatory required minimum capital ratios and met the
regulatory definition of a "well-capitalized" institution, i.e. a leverage
capital ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6% and a
total risk-based capital ratio exceeding 10%.
LIQUIDITY
Liquidity management involves the Company's ability to generate cash or
otherwise obtain funds at reasonable rates to support asset growth and reduce
assets to meet deposit withdrawals, to maintain reserve requirements, and to
otherwise operate the Company on an ongoing basis. The Company's primary
13
sources of funds are deposits, borrowed funds, amortization and prepayment of
loans and maturities of investment securities and other short-term investments,
and earnings and funds provided from operations. While scheduled principal
repayments on loans are a relatively predictable source of funds, deposit flows
and loan prepayments are greatly influenced by general interest rates, economic
conditions and competition. The Company manages the pricing of deposits to
maintain a desired deposit balance. In addition, the Company invests excess
funds in short-term interest-earning and other assets, which provide liquidity
to meet lending requirements.
The Company's liquidity has been enhanced by its membership in the Federal Home
Loan Bank of New York, whose competitive advance programs and lines of credit
provide the Company with a safe, reliable and convenient source of funds. A
significant decrease in deposits in the future could result in the Company
having to seek other sources of funds for liquidity purposes. Such sources
could include, but are not limited to, additional borrowings, trust preferred
security offerings, brokered deposits, negotiated time deposits, the sale of
"available-for-sale" investment securities, the sale of securitized loans, or
the sale of whole loans. Such actions could result in higher interest expense
costs and/or losses on the sale of securities or loans.
The Asset Liability Management Committee (ALCO) of the Company is responsible
for implementing the policies and guidelines for the maintenance of prudent
levels of liquidity. As of March 31, 2004, management believes that liquidity
as measured by the Company is in compliance with its policy guidelines.
14
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's risk of loss arising from adverse changes in the fair value of
financial instruments, or market risk, is composed primarily of interest rate
risk. The management of interest rate sensitivity seeks to avoid fluctuating
net interest margins and to provide consistent net interest income through
periods of changing interest rates. The primary objective of the Company's
asset-liability management activities is to maximize net interest income while
maintaining acceptable levels of interest rate risk. The Company has an
Asset-Liability Management Committee (ALCO) which is responsible for
establishing policies to limit exposure to interest rate risk, and to ensure
procedures are established to monitor compliance with those policies. Those
procedures include reviewing the Company's assets and liability policies,
setting prices and terms on rate-sensitive products, and monitoring and
measuring the impact of interest rate changes on the Company's earnings and
capital. The Company's Board of Directors reviews the guidelines established by
ALCO.
During the past three years, the Federal Reserve lowered interest rates thirteen
times by a total of 550 basis points. These interest rate reductions have
caused significant repricing of the bank's interest-earning assets and
interest-bearing liabilities. With the overnight borrowing rate at a 40 year
low, the Company is positioning itself for anticipated interest rate increases
in the future. Efforts are being made to shorten the repricing duration of its
rate sensitive assets by purchasing investment securities with maturities within
the next 3 to 5 years and promoting portfolio ARM (adjustable rate mortgage) and
hybrid ARM products. In addition, the Company is extending the duration of its
rate sensitive liabilities by lengthening the maturities of its existing
borrowings and offering certificates of deposit with three and four year terms
which allow depositors to make a one-time election, at any time during the term
of the certificate of deposit, to adjust the rate of the instrument to the then
prevailing rate for the certificate of deposit with the same term.
GAP ANALYSIS. At March 31, 2004, the total interest bearing liabilities
maturing or repricing within one year exceeded total interest-earning assets
maturing or repricing in the same period by $41.2 million, representing a
cumulative one-year gap ratio of a negative 13.62%.
EARNINGS AT RISK AND VALUE AT RISK. Management believes the simulation of net
interest income (Earnings at Risk) and net portfolio value (Value at Risk) in
different interest rate environments provides a more meaningful measure of
interest rate risk. Income simulation analysis captures both the potential of
all assets and liabilities to mature or reprice and the probability that they
will do so. Income simulation also attends to the relative interest rate
sensitivities of these items, and projects their behavior over an extended
period of time. Finally, income simulation permits management to assess the
probable effects on the balance sheet not only of changes in interest rates, but
also of proposed strategies for responding to them. Net portfolio value
represents the fair value of net assets (determined as the market value of
assets minus the market value of liabilities using a discounted cash flow
technique).
The following table measures the Company's interest rate risk exposure in terms
of the percentage change in its net interest income and net portfolio value as a
result of hypothetical changes in 100 basis point increments in market interest
rates. The table quantifies the changes in net interest income and net
portfolio value to parallel shifts in the yield curve. The column "Percentage
Change in Net Interest Income" measures the change to the next twelve month's
projected net interest income, due to parallel shifts in the yield curve. The
column "Percentage Change in Net Portfolio Value" measures changes in the
current fair value of assets and liabilities to parallel shifts in the yield
curve. The column "NPV Capital Ratio" measures the ratio of the fair value of
net assets to the fair value of total assets at the base case and in 100 basis
point incremental interest rate shocks. Currently, the Company's model projects
a 300 basis point increase and a 100 basis point decrease during the next year.
With the federal funds rate at a record low, the Company's ALCO believed it was
a better measure of current risk assuming a minus 100 point scenario, as a minus
300 basis point reduction would be unlikely given that current short-term market
interest rates are already below 3.00%. The Company uses these percentage
changes as a means to measure interest rate risk exposure and quantifies those
changes against guidelines set by the Board of Directors as part of the
Company's Interest Rate Risk policy. The Company's current interest rate risk
exposure is within those guidelines set forth.
Change in NPV
Interest Capital Earnings Value
Rates Ratio at Risk as Risk
- --------- -------- --------- --------
300 . . . 9.03% -11.62% -29.41%
200 . . . 9.91% -7.27% -17.93%
100 . . . 10.65% -3.16% -7.12%
0 11.11% ---- ----
- -100. . . 11.04% 1.86% 2.40%
15
ITEM 4 - CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company's management,
including our Chief Executive Officer and Chief Financial Officer, the Company
has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this quarterly report.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that, as of the end of the period covered by this report, the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed in the reports that the Company files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. There has been no change in the
Company's internal control over financial reporting during the most recent
fiscal quarter that has materially affected, or is reasonable likely to
materially affect, the Company's internal control over financial reporting.
16
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
- ------------------------------
None
ITEM 2 - CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUE OR PURCHASES OF EQUITY
- --------------------------------------------------------------------------------
SECURITIES
- ----------
Not applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------------
Not applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------------------
Not applicable
ITEM 5 - OTHER INFORMATION
- ------------------------------
Not applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------------
(a)
Exhibit No. Description
- ------------ -----------
10.1 Executive Officer Deferred Compensation Plan
10.2 Trustees Deferred Compensation Plan
31.1 Rule 13a-14(a) / 15d-14(a) Certification of the Chief
Executive Officer
31.2 Rule 13a-14(a) / 15d-14(a) Certification of the Chief
Financial Officer
32.1 Section 1350 Certification of the Chief Executive and Chief Financial
Officer
(b) Reports on Form 8-K
17
The Company has three Current Reports on Form 8-K during the first quarter
of the fiscal year ended March 31, 2004 dated February 6, 2004, March 14, 2004
and March 19, 2004 reporting press releases relating to the fourth quarter
earnings release, announcement of a stock repurchase plan and the announcement
of the first quarter cash dividends, respectively.
SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, the Company has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
PATHFINDER BANCORP, INC.
--------------------------
/s/ Thomas W. Schneider
--------------------------
Date: May 14, 2004 Thomas W. Schneider
President, Chief Executive Officer
/s/ James A. Dowd
-------------------
Date: May 14, 2004 James A. Dowd
Vice President, Chief Financial
Officer
EXHIBITS
EXHIBIT 10.1
EXECUTIVE DEFERRED
COMPENSATION PLAN
This Executive Deferred Compensation Plan (the "Plan"), effective as of the
31st day of December 2003, formalizes the understanding by and between
PATHFINDER BANK (the "Bank"), a state chartered stock savings bank, and certain
eligible Executives, hereinafter referred to as "Executive," who shall be
approved by the Bank to participate and who shall elect to become a party to
this Executive Deferred Compensation Plan by execution of an Executive Deferred
Compensation Plan Deferral Agreement ("Deferral Agreement") in a form provided
by the Bank. Pathfinder Bancorp, MHC, a Federal mutual holding company, and
Pathfinder Bancorp, Inc. (the "Holding Company") are parties to this Agreement
for the sole purpose of guaranteeing the Bank's performance hereunder.
W I T N E S S E T H :
WHEREAS, the Executives serve the Bank as members of the management; and
WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by such Executives and wishes to encourage continued service of each; and
WHEREAS, the Bank values the efforts, abilities and accomplishments of such
Executives and recognizes that the Executives' services substantially contribute
to its continued growth and profits in the future; and
WHEREAS, the Bank desires to adopt a deferred compensation plan for
Executives in order to permit the Executives to defer a portion of their
compensation;
WHEREAS, these Executives wish to defer a certain portion of their
compensation to be earned in the future; and
WHEREAS, the Bank and the Executives intend this Plan to be considered an
unfunded arrangement, maintained primarily to provide retirement income for such
Executives, for tax purposes and for purposes of the Employee Retirement Income
Security Act of 1974, as amended; and
WHEREAS, the Bank has adopted this Executive Deferred Compensation Plan
which controls all issues relating to the Deferred Compensation Benefits as
described herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree to the following terms and conditions:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Bank" means Pathfinder Bank and any successor thereto.
1.2 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary in the Executive's Deferral Agreement to whom the deceased
Executive's benefits are payable. If no Beneficiary is so designated, then
the Executive's Spouse, if living, will be deemed the Beneficiary. If the
Executive's Spouse is not living, then the Children of the Executive will
be deemed the Beneficiaries and will take on a per stirpes basis. If there
are no Children, then the Estate of the Executive will be deemed the
Beneficiary.
1.3 "Benefit Age" shall be the birthday on which the Executive becomes eligible
to receive benefits under the plan. Such birthday shall be designated in
the Executive's Deferral Agreement.
1.4 "Benefit Eligibility Date" shall be the date on which a Executive is
entitled to receive his Deferred Compensation Benefit. It shall be the
first day of the month following the month in which the Executive attains
the Benefit Age designated in his Deferral Agreement.
1.5 "Cause" means personal dishonesty, willful misconduct, willful malfeasance,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses), or final
cease-and-desist order, material breach of any provision of this Plan, or
gross negligence in matters of material importance to the Bank
1.6 "Change in Control" of the Bank or Holding Company means a change in
control of a nature that: (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the
Company within the meaning of the Home Owners' Loan Act, as amended, and
applicable rules and regulations promulgated thereunder (collectively, the
"HOLA") as in effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's outstanding securities except for any securities
purchased by the Bank's employee stock ownership plan or trust; or (b)
individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof
whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause
(b), considered as though he were a member of the Incumbent Board; or (c) a
plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Company or similar transaction in which the Company
is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than
the current management of the Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Company or similar
transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the Plan are
to be exchanged for or converted into cash or property or securities not
issued by the Company; or (e) a tender offer is made for 25% or more of the
voting securities of the Company and the shareholders owning beneficially
or of record 25% or more of the outstanding securities of the Company have
tendered or offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender offeror.
Notwithstanding anything in this subsection (b) to the contrary, a change
in control shall not be deemed to have occurred in the event of a
conversion of the Company's or the Bank's mutual holding company to stock
form, or in connection with any reorganization used to effect such a
conversion.
1.7 "Children" means the Executive's children, both natural and adopted,
determined at the time payments are due the Children under this Plan.
1.8 "Deferral Period" means the period of months designated in the Executive's
Deferral Agreement during which the Executive shall defer current
compensation. The Deferral Period shall commence on the date designated in
the Executive's Deferral Agreement.
1.9 "Deferred Compensation Benefit" means the annuitized value (using the
Interest Factor) of the Executive's Elective Contribution Account, measured
as of the Executive's Benefit Age, payable in monthly installments
throughout the Payout Period and commencing on the Executive's Benefit
Eligibility Date.
1.10 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 5.2, that he is no
longer able, properly and satisfactorily, to perform his duties as a
Executive.
1.11 "Effective Date" of this Plan is December 31, 2003.
1.12 "Elective Contribution" shall refer to any bookkeeping entry required to
record a Executive's voluntary monthly pre-tax deferral of compensation
which shall be made in accordance with the Executive's Deferral Agreement.
1.13 "Elective Contribution Account" shall be represented by the bookkeeping
entries required to record a Executive's Elective Contributions plus
accrued interest calculated with the Interest Factor, earned to date on
such amounts. However, neither the existence of such bookkeeping entries
nor the Elective Contribution Account itself shall be deemed to create
either a trust of any kind, or a fiduciary relationship between the Bank
and the Executive or any Beneficiary.
1.14 "Estate" means the estate of the Executive.
1.15 "Interest Factor" means either the Pre-Retirement Interest Factor or the
Post-Retirement Interest Factor, as applicable.
1.16 "Payout Period" means the time frame during which certain benefits payable
hereunder shall be distributed. Payments shall be made in equal monthly
installments commencing on the first day of the first month following the
occurrence of the event which triggers distribution and continuing for a
period of one-hundred twenty (120) months, as designated in the Executive's
Deferral Agreement.
1.17 "Plan Year" shall mean the twelve (12) month period from January 1 to
December 31 of each year.
1.18 "Post-Retirement Interest Factor" means a rate applicable to annuitize the
Elective Contribution Account of a Executive in connection with installment
distributions made following a Executive's retirement or other termination
of employment. Unless changed pursuant to a written resolution of the Board
of Executives, the Post-Retirement Interest Factor shall be seven percent
(7%) per annum.
1.19 "Pre-Retirement Interest Factor" means a rate applied to accruals credited
to a Executive's Elective Contribution Account prior to the Executive's
retirement or other termination of employment. Unless changed pursuant to a
written resolution of the Board of Executives, the Pre-Retirement Interest
Factor shall be a rate equivalent to the prime interest rate as published
in the Wall Street Journal each January 1, plus three percent (3%). For the
initial Plan Year, the Pre-Retirement Interest Factor shall be seven
percent (7%). The Pre-Retirement Interest Factor shall be calculated each
January 1 during the Deferral Period, and such rate shall be the applicable
Pre-Retirement Interest Factor for the Plan Year for which it is
calculated.
1.20 "Projected Deferral" is an estimate, determined upon execution of a
Deferral Agreement, of the total amount of compensation to be deferred by
the Executive during his Deferral Period (excluding any interest accrued on
such deferrals), and so designated in the Executive's Deferral Agreement.
1.21 "Spouse" means the individual to whom the Executive is legally married at
the time of the Executive's death.
1.22 "Survivor's Benefit" means if the Bank has obtained insurance on the life
of the Executive, an annual amount payable to the Beneficiary in monthly
installments throughout the Payout Period, equal to the amount designated
in the Executive's Deferral Agreement. If the Bank has not obtained
insurance on the life of the Executive, the Survivor's Benefit shall be
equal to the accrued benefit in the Executive's Elective Contribution
Account as of the Executive's date of death, annuitized (using the
Post-Retirement Interest Factor) and payable in monthly installments
throughout the Payout Period.
SECTION II
ESTABLISHMENT OF RABBI TRUST
The Bank shall establish a rabbi trust into which the Bank shall contribute
assets which shall be held therein, pursuant to the agreement which establishes
such rabbi trust. The contributed assets shall be subject to the claims of the
Bank's creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed assets are
paid to the Executive and his Beneficiary(ies) in such manner and at such times
as specified in this Plan. It is the intention of the Bank to make a
contribution or contributions to the rabbi trust to provide the Bank with a
source of funds to assist it in meeting the liabilities of this Plan. The rabbi
trust and any assets held therein shall conform to the terms of the rabbi trust
agreement which has been established in conjunction with this Plan. Any
contribution(s) to the rabbi trust shall be made in accordance with the rabbi
trust agreement. The amount and timing of such contribution(s) shall be
specified in the agreement which establishes such rabbi trust.
SECTION III
DEFERRED COMPENSATION
Commencing on the Effective Date and continuing through the end of the Deferral
Period, the Executive and the Bank agree that the Executive may defer into his
Elective Contribution Account on a monthly basis a percentage or dollar amount
of such Executive's compensation up to Seven Hundred Fifty Dollars ($750.00)
which the Executive would otherwise be entitled to receive from the Bank for
each month of the Deferral Period. The total deferral during the term of the
Deferral Period shall not exceed the Executive's Projected Deferral, without
Board of Executive approval. The specific amount of the Executive's monthly
deferred compensation shall be designated in the Executive's Deferral Agreement
and shall apply only to compensation attributable to services not yet performed.
SECTION IV
ADJUSTMENT OF DEFERRAL AMOUNT
Deferral of the specific amount of compensation designated in the
Executive's Deferral Agreement shall continue in effect pursuant to the terms of
this Plan unless and until the Executive amends his Deferral Agreement by filing
with the Administrator a Notice of Adjustment of Deferral Amount (Exhibit C of
the Deferral Agreement). A Notice of Adjustment of Deferral Amount shall be
effective if filed with the Administrator at least thirty (30) days prior to any
January 1st during the Executive's Deferral Period. Such Notice of Adjustment
of Deferral Amount shall be effective commencing with the January 1st following
its filing and shall be applicable only to compensation attributable to services
not yet performed by the Executive.
SECTION V
RETIREMENT BENEFIT
5.1 Retirement Benefit. Subject to Subsection 6.1 of this Plan, the Bank agrees
to pay the Executive the Deferred Compensation Benefit commencing on the
Executive's Benefit Eligibility Date. Such payments will be made over the
term of the Payout Period. In the event of the Executive's death after
commencement of the Deferred Compensation Benefit, but prior to completion
of all such payments due and owing hereunder, the Bank shall pay to the
Executive's Beneficiary a continuation of the monthly installments for the
number of months remaining in the Payout Period.
5.2 Disability Benefit. If requested by the Executive and approved by the Board
of Trustees, the Executive shall be entitled to receive the Disability
Benefit hereunder, in any case in which it is determined by a duly licensed
independent physician selected by the Bank, that the Executive is no longer
able, properly and satisfactorily, to perform his regular duties as a
Executive because of ill health, accident, disability or general inability
due to age. If the Executive's service is terminated pursuant to this
Subsection and Board of Executive approval is obtained, the Executive may
elect to begin receiving the Disability Benefit in lieu of the Deferred
Compensation Benefit, which is not available prior to the Executive's
Benefit Eligibility Date. The benefit shall begin within thirty (30) days
of the Board of Trustees' approval of such benefit. The amount of the
monthly benefit shall be the annuitized value of the Executive's Elective
Contribution Account, measured as of the date of the disability
determination and payable over the Payout Period. The Post-Retirement
Interest Factor shall be used to annuitize the Elective Contribution
Account. In the event the Executive dies while receiving Disability Benefit
payments pursuant to this Subsection, or after becoming eligible for such
payments but before the actual commencement of such payments, his
Beneficiary shall be entitled to receive those benefits provided for in
Subsection 6.1(a) and the Disability Benefits provided for in this
Subsection shall terminate upon the Executive's death.
5.3 Removal For Cause. In the event the Executive is removed for Cause at any
time prior to reaching his Benefit Age, he shall be entitled to receive the
balance of his Elective Contribution Account, measured as of the date of
removal. Such amount shall be paid in a lump sum within thirty (30) days of
the Executive's date of removal. All other benefits provided for the
Executive or his Beneficiary under this Plan shall be forfeited and the
Plan shall become null and void with respect to such Executive.
5.4 Voluntary or Involuntary Termination Other Than for Cause. If the
Executive's employment with the Bank is voluntarily or involuntarily
terminated prior to the attainment of his Benefit Eligibility Date, for any
reason other than for Cause, the Executive's death or disability, then
commencing on his Benefit Eligibility Date, the Executive shall be entitled
to the annuitized value (using the Interest Factor) of his Elective
Contribution Account calculated as of his Benefit Eligibility Date, and
payable over the Payout Period.
5.5 Termination of Employment Related to a Change in Control. If a Change in
Control occurs, and thereafter the Executive's employment is terminated
(either voluntarily or involuntarily) within thirty-six (36) months, the
Executive shall be entitled to receive his Deferred Compensation Benefit
calculated as if Executive had made all of his elective deferrals through
his Benefit Age. Such benefit shall be annuitized (using the Interest
Factor) and be payable commencing on such Executive's Benefit Eligibility
Date in monthly installments throughout the Payout Period. In the event the
Executive dies at any time after termination of employment, but prior to
commencement of such payments due and owing hereunder, the Bank or its
successor, shall pay to the Executive's Beneficiary, the Survivor's
Benefit. In the event the Executive dies at any time after commencement of
such payments, but prior to completion of all such payments due and owing
hereunder, the Bank or its successor shall pay to the Executive's
Beneficiary a continuation of the monthly installments for the remainder of
the Payout Period.
5.6 Modification of Benefit Age. If the Executive elects to modify his Benefit
Age ("Modified Benefit Age") and to commence receiving benefits hereunder
before attainment of his Benefit Age as set forth on his Deferral
Agreement, Executive shall be entitled to receive the value of his Elective
Contribution Account calculated as of the last day of the month in which
Executive attains his Modified Benefit Age, provided, however, that
Executive must have made such an election at least thirteen (13) months
prior to the first day of the month in which Executive attains his Modified
Benefit Age (as set forth herein at Exhibit D). Such early benefit shall be
annuitized (using the Interest Factor) and be payable commencing on the
first day of the second month following Executive's attaining his Modified
Benefit Age in monthly installments throughout the Payout Period. In the
event the Executive dies at any time after designating his Modified Benefit
Age, but prior to commencement of such payments due and owing hereunder,
the Bank or its successor shall pay to the Executive's Beneficiary the
Survivor's Benefit. In the event the Executive dies at any time after
commencement of the benefit payments, but prior to completion of all such
payments due and owing hereunder, the Bank or its successor shall pay to
the Executive's Beneficiary a continuation of the monthly installments for
the remainder of the Payout Period.
SECTION VI
DEATH BENEFITS
6.1 Death Benefit Prior to Commencement of Deferred Compensation Benefit. In
the event of the Executive's death prior to commencement of the Deferred
Compensation Benefit, the Bank shall pay the Executive's Beneficiary a
monthly benefit for the Payout Period, commencing within thirty (30) days
of the Executive's death. The amount of such monthly benefit payments shall
be determined as follows:
(a) (1) In the event death occurs (i) while the Executive is receiving the
Disability Benefit provided for in Subsection 5.2, or (ii) after the
Executive has become eligible for such Disability Benefit payments but
before such payments have commenced, the Executive's Beneficiary shall
be entitled to receive the Survivor's Benefit for the number of months
in the Payout Period, reduced by the number of months Disability
Benefit payments were made to the Executive. In the event death occurs
after the Executive has received the Disability Benefit provided for
in Subsection 5.2 for the entire Payout Period, the Executive's
Beneficiary shall not be entitled to the Survivor's Benefit for any
length of time. However, the lump sum payment described in paragraph
two (2) of this Subsection 6.1(a) if approved by the Board of
Executives, and the payment described in Section 6.2, shall still be
applicable to such Beneficiary.
(2) If (i) the total dollar amount of Disability Benefit payments
received by the Executive under Subsection 5.2 is less than the total
dollar amount of payments which would have been received had the
Survivor's Benefit been paid in lieu of the Disability Benefit which
was paid during the Executive's life, and (ii) Board of Director
approval is obtained, the Bank shall pay the Executive's Beneficiary a
lump sum payment for the difference. This lump sum payment shall be
made within thirty (30) days of the Executive's death.
(b) In the event death occurs while the Executive is (i) in the employment
of the Bank, (ii) deferring compensation pursuant to Section II and
(iii) prior to any reduction or discontinuance (via an effective
filing of a Notice of Adjustment of Deferral Amount) in the level of
deferrals reflected in the Executive's Deferral Agreement, the
Executive's Beneficiary shall be paid the Survivor's Benefit.
(c) In the event death occurs while the Executive is (i) in the employment
of the Bank, (ii) deferring compensation pursuant to Section II, and
(iii) after any reduction or discontinuance (via an effective filing
of a Notice of Adjustment of Deferral Amount) in the level of
deferrals reflected in the Executive's Deferral Agreement, the
Executive's Beneficiary shall be paid a reduced Survivor's Benefit.
The amount of such reduced Survivor's Benefit shall be determined by
multiplying the monthly payment available as a Survivor's Benefit by a
fraction, the numerator of which is equal to the total compensation
actually deferred by the Executive as of his death, and the
denominator of which is equal to the total amount of compensation
which would have been deferred as of his death, if no reduction or
discontinuance in the level of deferrals had occurred at any time
following execution of the Deferral Agreement and during the Deferral
Period.
(d) In the event the Executive completes less than One Hundred Percent
(100%) of his Projected Deferrals due to any voluntary or involuntary
termination other than removal for Cause, the Executive's Beneficiary
shall be paid a reduced Survivor's Benefit. The amount of such reduced
Survivor's Benefit shall be determined by multiplying the monthly
payment available as a Survivor's Benefit by a fraction, the numerator
of which is equal to the total compensation actually deferred by the
Executive, and the denominator of which is equal to the Executive's
Projected Deferral.
(e) In the event the Executive completes One Hundred Percent (100%) of his
Projected Deferrals prior to any voluntary or involuntary termination
other than removal for Cause, and provided no payments have been made
pursuant to Subsection 5.2, the Executive's Beneficiary shall be paid
the Survivor's Benefit.
6.2 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive's death, the Executive's
Beneficiary shall be entitled to receive a one-time lump sum death benefit
in the amount of Ten Thousand Dollars ($10,000.00). This benefit shall be
provided specifically for the purpose of providing payment for burial
and/or funeral expenses of the Executive. Such benefit shall be payable
within thirty (30) days of the Executive's death. The Executive's
Beneficiary shall not be entitled to such benefit if the Executive is
removed for Cause prior to death, or if a similar lump sum death benefit is
paid by the Bank to the Beneficiary under another similar plan of the Bank.
SECTION VII
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Deferral Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Deferral
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Deferral Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION VIII
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or any other person claiming
through the Executive under this Plan, shall be solely those of an unsecured
general creditor of the Bank. The Executive, the Beneficiary, or any other
person claiming through the Executive, shall only have the right to receive from
the Bank those payments so specified under this Plan. The Executive agrees that
he, his Beneficiary, or any other person claiming through him shall have no
rights or interests whatsoever in any asset of the Bank, including any insurance
policies or contracts which the Bank may possess or obtain to informally fund
this Plan.
Any asset used or acquired by the Bank in connection with the liabilities
it has assumed under this Plan, unless expressly provided herein, shall not be
deemed to be held under any trust for the benefit of the Executive or his
Beneficiaries, nor shall any asset be considered security for the performance of
the obligations of the Bank. Any such asset shall be and remain, a general,
unpledged, and unrestricted asset of the Bank.
SECTION IX
RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any fund
or money with which to pay its obligations under this Plan. The Executive, his
Beneficiaries or any successor in interest to him shall be and remain simply a
general unsecured creditor of the Bank in the same manner as any other creditor
having a general claim for matured and unpaid compensation. The Bank reserves
the absolute right in its sole discretion to either purchase assets to meet its
obligations undertaken by this Plan or to refrain from the same and to determine
the extent, nature, and method of any such asset purchases. Should the Bank
decide to purchase assets such as life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such assets at any time, in whole or in part. At no
time shall the Executive be deemed to have any lien, right, title or interest in
or to any specific investment or to any assets of the Bank. If the Bank elects
to invest in a life insurance, disability or annuity policy upon the life of the
Executive, then the Executive shall assist the Bank by freely submitting to a
physical examination and by supplying such additional information necessary to
obtain such insurance or annuities.
SECTION X
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any Beneficiary under this Plan shall have any
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder,
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Executive or his
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any Beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and terminate.
SECTION XI
ACT PROVISIONS
11.1 Named Fiduciary and Administrator. The Bank shall be the Named Fiduciary
and Administrator (the "Administrator") of this Plan. As Administrator, the
Bank shall be responsible for the management, control and administration of
the Plan as established herein. The Administrator may delegate to others
certain aspects of the management and operational responsibilities of the
Plan, including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
11.2 Claims Procedure and Arbitration. In the event that benefits under this
Plan are not paid to the Executive (or to his Beneficiary in the case of
the Executive's death) and such claimants feel they are entitled to receive
such benefits, then a written claim must be made to the Administrator
within sixty (60) days from the date payments are refused. The
Administrator shall review the written claim and, if the claim is denied,
in whole or in part, they shall provide in writing, within ninety (90) days
of receipt of such claim, their specific reasons for such denial, reference
to the provisions of this Plan or the Deferral Agreement upon which the
denial is based, and any additional material or information necessary to
perfect the claim. Such writing by the Administrator shall further indicate
the additional steps which must be undertaken by claimants if an additional
review of the claim denial is desired.
If claimants desire a second review, they shall notify the Administrator in
writing within sixty (60) days of the first claim denial. Claimants may
review this Plan, the Deferral Agreement or any documents relating thereto
and submit any issues and comments, in writing, they may feel appropriate.
In its sole discretion, the Administrator shall then review the second
claim and provide a written decision within sixty (60) days of receipt of
such claim. This decision shall state the specific reasons for the decision
and shall include reference to specific provisions of this Plan or the
Deferral Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Plan and the Deferral Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered by
the AAA under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION XII
MISCELLANEOUS
12.1 No Guarantee of Employment. Nothing contained herein will confer upon the
Executive the right to be retained in the service of the Bank nor limit the
right of the Bank to discharge or otherwise deal with the Executive without
regard to the existence of the Plan. Notwithstanding anything herein
contained to the contrary, any payment to the Executive by the Holding
Company are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and
the regulations promulgated thereunder in 12 C.F.R. Part 359.
12.2 State Law. The Plan is established under, and will be construed according
to, the laws of the state of New York.
12.3 Severability and Interpretation of Provisions. In the event that any of the
provisions of this Plan or portion thereof, are held to be inoperative or
invalid by any court of competent jurisdiction, or in the event that any
legislation adopted by any government body having jurisdiction over the
Bank would be retroactively applied to invalidate this Plan or any
provision hereof or cause the benefits hereunder to be taxable, then: (1)
insofar as is reasonable, effect will be given to the intent manifested in
the provisions held invalid or inoperative, and (2) the validity and
enforceability of the remaining provisions will not be affected thereby. In
the event that the intent of any provision shall need to be construed in
any manner to avoid taxability, such construction shall be made by the Plan
Administrator in a manner that would manifest to the maximum extent
possible the original meaning of such provisions.
12.4 Incapacity of Recipient. In the event the Executive is declared incompetent
and a conservator or other person legally charged with the care of his
person or Estate is appointed, any benefits under the Plan to which such
Executive is entitled shall be paid to such conservator or other person
legally charged with the care of his person or Estate.
12.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. If the
location of the Executive is not made known to the Bank within three (3)
years after the date on which any payment of the Deferred Compensation
Benefit may first be made, payment may be made as though the Executive had
died at the end of the three (3) year period.
12.6 Limitations on Liability. Notwithstanding any of the preceding provisions
of the Plan, no individual acting as an employee or agent of the Bank, or
as a member of the Board of Trustees shall be personally liable to the
Executive or any other person for any claim, loss, liability or expense
incurred in connection with this Plan.
12.7 Gender. Whenever in this Plan words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
12.8 Effect on Other Corporate Benefit Plans. Nothing contained in this Plan
shall affect the right of the Executive to participate in or be covered by
any qualified or non-qualified pension, profit sharing, group, bonus or
other supplemental compensation or fringe benefit agreement constituting a
part of the Bank's existing or future compensation structure.
12.9 Suicide. Notwithstanding anything to the contrary in this Plan, the
benefits otherwise provided herein shall not be payable if the Executive's
death results from suicide, whether sane or insane, within twenty-six (26)
months after the execution of his Deferral Agreement. If the Executive dies
during this twenty-six (26) month period due to suicide, the balance of his
Elective Contribution Account will be paid to the Executive's Beneficiary
in a single payment. Payment is to be made within thirty (30) days after
the Executive's death is declared a suicide by competent legal authority.
Credit shall be given to the Bank for payments made prior to determination
of suicide.
12.10 Inurement. This Plan shall be binding upon and shall inure to the benefit
of the Bank, its successors and assigns, and the Executive, his successors,
heirs, executors, administrators, and Beneficiaries.
12.11 Source of Payments. All payments provided in this Plan shall be timely
paid in cash or check from the general funds of the Bank or the assets of
the rabbi trust. The Holding Company guarantees payment and provision of
all amounts and benefits due to the Executives and, if such amounts and
benefits are not timely paid or provided by the Bank, or the rabbi trust,
such amounts and benefits shall be paid or provided by the Holding Company.
12.12 Modification of Benefit Eligibility Date. In the event that a Executive
desires to modify his Benefit Eligibility Date or Payout Period with
respect to future Elective Contributions, the Executive may do so at the
time and in the manner that the Executive is entitled to adjust his
Elective Contribution, pursuant to Section IV of the Plan. In the event
that a Executive desires to modify his Benefit Eligibility Date or Payout
Period with respect to amounts accrued in his Elective Contribution Account
the Executive may do so, provided, however, that any such modification is
made no later than twenty-four (24) months prior to the date of both (i)
the Executive's existing Benefit Eligibility (at the time of such
modification) and (ii) the Executive's Benefit Eligibility Date, as
modified.
12.13 Tax Withholding. If applicable, the Bank may withhold from any benefits
payable under this Plan all federal, state, city, or other taxes as shall
be required pursuant to any law or governmental regulation then in effect.
12.14 Headings. Headings and sub-headings in this Plan are inserted for
reference and convenience only and shall not be deemed a part of this Plan.
SECTION XIII
AMENDMENT/REVOCATION
This Plan shall not be amended, modified or revoked at any time, in whole
or part, without the mutual written consent of the Executive and the Bank, and
such mutual consent shall be required even if the Executive is no longer serving
the Bank as a member of the Board; provided, however, mutual consent shall not
be required if such amendment or modification is required by a regulatory agency
having jurisdiction over the Bank or the Holding Company or is necessary to
avoid taxation of the benefits payable hereunder prior to their distribution or
is desirable or required pursuant to Section 12.3 hereof.
SECTION XIV
EXECUTION
14.1 This Plan sets forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the subject
matter hereof are merged into and superseded by this Plan.
14.2 This Plan shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies shall
together constitute one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the Bank has caused this Plan to be executed on the day
and date first above written.
ATTEST: PATHFINDER BANK
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
ATTEST: PATHFINDER BANCORP, INC.
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
ATTEST: PATHFINDER BANCORP, MHC
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
EXHIBIT A
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL AGREEMENT
I, Thomas W. Schneider, and PATHFINDER BANK hereby agree for good and
valuable consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Executive Deferred Compensation Plan (the
"Plan"), effective December 31, 2003, as such Plan may now exist or hereafter be
amended or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $ 417 of my monthly
Compensation. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $50,000. I
understand that this election to defer applies only to Compensation attributable
to services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Compensation to be deferred or to
discontinue deferrals altogether.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $2,857 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Executive and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ Thomas W. Schneider /s/ Melissa A. Miller
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Executive Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
The Executive, under the terms of the Pathfinder Bank Executive Deferred
Compensation Plan hereby designates the following Beneficiary to receive any
guaranteed payments or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Joy Ann Schneider
-------------------
SECONDARY BENEFICIAY: Thomas J. Schneider, Matthew R. Schneider,
-----------------------------------------------
James A. Schneider; equally per stirpes
--------------------------------------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: _________________, 20 ___
/s/ W. J. Landers /s/ Thomas Schneider
- -------------------- ----------------------
WITNESS EXECUTIVE
/s/ Chris C. Gagas
- ---------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL AGREEMENT
I, Melissa A. Miller, and PATHFINDER BANK hereby agree for good and
valuable consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Executive Deferred Compensation Plan (the
"Plan"), effective December 31, 2003, as such Plan may now exist or hereafter be
amended or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $ 417 of my monthly
Compensation. Such deferrals shall commence on February 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $50,000. I
understand that this election to defer applies only to Compensation attributable
to services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Compensation to be deferred or to
discontinue deferrals altogether.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $2,174 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Executive and a duly authorized officer of the Bank.
Dated this ____ day of January, 2004.
/s/ Melissa A. Miller /s/ Thomas W. Schneider
- ------------------------ --------------------------
Executive Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
The Executive, under the terms of the Pathfinder Bank Executive Deferred
Compensation Plan hereby designates the following Beneficiary to receive any
guaranteed payments or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Lisa E. Dashnau
-----------------
SECONDARY BENEFICIAY: Makayla Dashnau (Mesec) and Madison Dashnau
------------------------------------------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: _________________, 20 ___
/s/ Thomas Schneider /s/ Melissa A. Miller
- ---------------------- ------------------------
WITNESS EXECUTIVE
/s/ James A. Dowd
- --------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL AGREEMENT
I, James A. Dowd, and PATHFINDER BANK hereby agree for good and valuable
consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Executive Deferred Compensation Plan (the
"Plan"), effective December 31, 2003, as such Plan may now exist or hereafter be
amended or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $ 417 of my monthly
Compensation. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $50,000. I
understand that this election to defer applies only to Compensation attributable
to services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Compensation to be deferred or to
discontinue deferrals altogether.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $4,394 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Executive and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ James A. Dowd /s/ Thomas W. Schneider
- -------------------- --------------------------
Executive Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
EXECUTIVE DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
The Executive, under the terms of the Pathfinder Bank Executive Deferred
Compensation Plan hereby designates the following Beneficiary to receive any
guaranteed payments or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Nancy J. Dowd (Mother)
-------------------------
SECONDARY BENEFICIAY: John W. Dowd (Brother)
-------------------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: _________________, 20 ___
/s/ W. J. Landers /s/ James A. Dowd
- -------------------- --------------------
WITNESS EXECUTIVE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT 10.2
TRUSTEE DEFERRED
FEE PLAN
This Trustee Deferred Fee Plan (the "Plan"), effective as of the 31st day
of December 2003, formalizes the understanding by and between PATHFINDER BANK
(the "Bank"), a state chartered stock savings bank, and certain eligible
Trustees, hereinafter referred to as "Trustee", who shall be approved by the
Bank to participate and who shall elect to become a party to this Trustee
Deferred Fee Plan by execution of a Trustee Deferred Fee Plan Deferral Agreement
("Deferral Agreement") in a form provided by the Bank. Pathfinder Bancorp, MHC,
a Federal mutual holding company, and Pathfinder Bancorp, Inc. (the "Holding
Company") are parties to this Agreement for the sole purpose of guaranteeing
the Bank's performance hereunder.
W I T N E S S E T H :
WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by its Trustees and wishes to encourage continued service of each; and
WHEREAS, the Bank values the efforts, abilities and accomplishments of such
Trustees and recognizes that the Trustees' services substantially contribute to
its continued growth and profits in the future; and
WHEREAS, the Bank desires to adopt a deferred compensation plan for
Trustees in order to permit the Trustees to defer a portion of their fees; and
WHEREAS, these Trustees wish to defer a certain portion of their fees to be
earned in the future; and
WHEREAS, the Bank and the Trustees intend this Plan to be considered an
unfunded arrangement, maintained primarily to provide retirement income for such
Trustees, for tax purposes and for purposes of the Employee Retirement Income
Security Act of 1974, as amended; and
WHEREAS, the Bank has adopted this Trustee Deferred Fee Plan which controls
all issues relating to the Deferred Compensation Benefits as described herein.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree to the following terms and conditions:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Bank" means Pathfinder Bank and any successor thereto.
1.2 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary in the Trustee's Deferral Agreement to whom the deceased
Trustee's benefits are payable. If no Beneficiary is so designated, then
the Trustee's Spouse, if living, will be deemed the Beneficiary. If the
Trustee's Spouse is not living, then the Children of the Trustee will be
deemed the Beneficiaries and will take on a per stirpes basis. If there are
no Children, then the Estate of the Trustee will be deemed the Beneficiary.
1.3 "Benefit Age" shall be the birthday on which the Trustee becomes eligible
to receive benefits under the plan. Such birthday shall be designated in
the Trustee's Deferral Agreement.
1.4 "Benefit Eligibility Date" shall be the date on which a Trustee is entitled
to receive his Deferred Compensation Benefit. It shall be the first day of
the month following the month in which the Trustee attains the Benefit Age
designated in his Deferral Agreement.
1.5 "Cause" means personal dishonesty, willful misconduct, willful malfeasance,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses), or final
cease-and-desist order, material breach of any provision of this Plan, or
gross negligence in matters of material importance to the Bank.
1.6 "Change in Control" of the Bank or Holding Company means a change in
control of a nature that: (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the
Company within the meaning of the Home Owners' Loan Act, as amended, and
applicable rules and regulations promulgated thereunder (collectively, the
"HOLA") as in effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's outstanding securities except for any securities
purchased by the Bank's employee stock ownership plan or trust; or (b)
individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof
whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause
(b), considered as though he were a member of the Incumbent Board; or (c) a
plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Company or similar transaction in which the Company
is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than
the current management of the Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Company or similar
transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the Plan are
to be exchanged for or converted into cash or property or securities not
issued by the Company; or (e) a tender offer is made for 25% or more of the
voting securities of the Company and the shareholders owning beneficially
or of record 25% or more of the outstanding securities of the Company have
tendered or offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender offeror.
Notwithstanding anything in this subsection (b) to the contrary, a change
in control shall not be deemed to have occurred in the event of a
conversion of the Company's or the Bank's mutual holding company to stock
form, or in connection with any reorganization used to effect such a
conversion.
1.7 "Children" means the Trustee's children, both natural and adopted,
determined at the time payments are due the Children under this Plan.
1.8 "Deferral Period" means the period of months designated in the Trustee's
Deferral Agreement during which the Trustee shall defer current fees. The
Deferral Period shall commence on the date designated in the Trustee's
Deferral Agreement.
1.9 "Deferred Compensation Benefit" means the annuitized value (using the
Interest Factor) of the Trustee's Elective Contribution Account, measured
as of the Trustee's Benefit Age, payable in monthly installments throughout
the Payout Period and commencing on the Trustee's Benefit Eligibility Date.
1.10 "Disability Benefit" means the monthly benefit payable to the Trustee
following a determination, in accordance with Subsection 5.2, that he is no
longer able, properly and satisfactorily, to perform his duties as a
Trustee.
1.11 "Effective Date" of this Plan is December 31, 2003.
1.12 "Elective Contribution" shall refer to any bookkeeping entry required to
record a Trustee's voluntary monthly pre-tax deferral of fees which shall
be made in accordance with the Trustee's Deferral Agreement.
1.13 "Elective Contribution Account" shall be represented by the bookkeeping
entries required to record a Trustee's Elective Contributions plus accrued
interest calculated with the Interest Factor, earned to date on such
amounts. However, neither the existence of such bookkeeping entries nor the
Elective Contribution Account itself shall be deemed to create either a
trust of any kind, or a fiduciary relationship between the Bank and the
Trustee or any Beneficiary.
1.14 "Estate" means the estate of the Trustee.
1.15 "Interest Factor" means either the Pre-Retirement Interest Factor or the
Post-Retirement Interest Factor, as applicable.
1.16 "Payout Period" means the time frame during which certain benefits payable
hereunder shall be distributed. Payments shall be made in equal monthly
installments commencing on the first day of the first month following the
occurrence of the event which triggers distribution and continuing for a
period of one-hundred twenty (120) months, as designated in the Trustee's
Deferral Agreement.
1.17 "Plan Year" shall mean the twelve (12) month period from January 1 to
December 31 of each year.
1.18 "Post-Retirement Interest Factor" means a rate applicable to annuitize the
Elective Contribution Account of a Trustee in connection with installment
distributions made following a Trustee's retirement or other termination of
service. Unless changed pursuant to a written resolution of the Board of
Trustees, the Post-Retirement Interest Factor shall be seven percent (7%)
per annum.
1.19 "Pre-Retirement Interest Factor" means a rate applied to accruals credited
to a Trustee's Elective Contribution Account prior to the Trustee's
retirement or other termination of service. Unless changed pursuant to a
written resolution of the Board of Trustees, the Pre-Retirement Interest
Factor shall be a rate equivalent to the prime interest rate as published
in the Wall Street Journal each January 1, plus three percent (3%). For the
initial Plan Year, the Pre-Retirement Interest Factor shall be seven
percent (7%). The Pre-Retirement Interest Factor shall be calculated each
January 1 during the Deferral Period, and such rate shall be the applicable
Pre-Retirement Interest Factor for the Plan Year for which it is
calculated.
1.20 "Projected Deferral" is an estimate, determined upon execution of a
Deferral Agreement, of the total amount of compensation to be deferred by
the Trustee during his Deferral Period (excluding any interest accrued on
such deferrals), and so designated in the Trustee's Deferral Agreement.
1.21 "Spouse" means the individual to whom the Trustee is legally married at the
time of the Trustee's death.
1.22 "Survivor's Benefit" means if the Bank has obtained insurance on the life
of the Trustee, an annual amount payable to the Beneficiary in monthly
installments throughout the Payout Period, equal to the amount designated
in the Trustee's Deferral Agreement. If the Bank has not obtained insurance
on the life of the Trustee, the Survivor's Benefit shall be equal to the
accrued benefit in the Trustee's Elective Contribution Account as of the
Trustee's date of death, annuitized (using the Post-Retirement Interest
Factor) and payable in monthly installments throughout the Payout Period.
SECTION II
ESTABLISHMENT OF RABBI TRUST
The Bank shall establish a rabbi trust into which the Bank shall contribute
assets which shall be held therein, pursuant to the agreement which establishes
such rabbi trust. The contributed assets shall be subject to the claims of the
Bank's creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed assets are
paid to the Trustee and his Beneficiary(ies) in such manner and at such times as
specified in this Plan. It is the intention of the Bank to make a contribution
or contributions to the rabbi trust to provide the Bank with a source of funds
to assist it in meeting the liabilities of this Plan. The rabbi trust and any
assets held therein shall conform to the terms of the rabbi trust agreement
which has been established in conjunction with this Plan. Any contribution(s) to
the rabbi trust shall be made in accordance with the rabbi trust agreement. The
amount and timing of such contribution(s) shall be specified in the agreement
which establishes such rabbi trust.
SECTION III
DEFERRED COMPENSATION
Commencing on the Effective Date and continuing through the end of the Deferral
Period, the Trustee and the Bank agree that the Trustee may defer into his
Elective Contribution Account on a monthly basis up to the lesser of (i) Seven
Hundred Fifty Dollars ($750.00), or (ii) One Hundred Percent (100%) of the
monthly fees which the Trustee would otherwise be entitled to receive from the
Bank for each month of the Deferral Period. The total deferral during the term
of the Deferral Period shall not exceed the Trustee's Projected Deferral,
without Board of Trustee approval. The specific amount of the Trustee's monthly
deferred compensation shall be designated in the Trustee's Deferral Agreement
and shall apply only to compensation attributable to services not yet performed.
SECTION IV
ADJUSTMENT OF DEFERRAL AMOUNT
Deferral of the specific amount of fees designated in the Trustee's
Deferral Agreement shall continue in effect pursuant to the terms of this Plan
unless and until the Trustee amends his Deferral Agreement by filing with the
Administrator a Notice of Adjustment of Deferral Amount (Exhibit B of the
Deferral Agreement). If the Bank increases the amount of fees and/or retainer
earned by the Trustee, the Trustee can include such additional amounts in his
monthly deferral, subject to the limits of Section III herein, provided approval
from the Board of Trustees is obtained, by filing a Notice of Adjustment of
Deferral Amount. A Notice of Adjustment of Deferral Amount shall be effective if
filed with the Administrator at least thirty (30) days prior to any January 1st
during the Trustee's Deferral Period. Such Notice of Adjustment of Deferral
Amount shall be effective commencing with the January 1st following its filing
and shall be applicable only to compensation attributable to services not yet
performed by the Trustee.
SECTION V
RETIREMENT BENEFIT
5.1 Retirement Benefit. Subject to Subsection 6.1 of this Plan, the Bank agrees
to pay the Trustee the Deferred Compensation Benefit commencing on the
Trustee's Benefit Eligibility Date. Such payments will be made over the
term of the Payout Period. In the event of the Trustee's death after
commencement of the Deferred Compensation Benefit, but prior to completion
of all such payments due and owing hereunder, the Bank shall pay to the
Trustee's Beneficiary a continuation of the monthly installments for the
number of months remaining in the Payout Period.
5.2 Disability Benefit. If requested by the Trustee and approved by the Board
of Trustees, the Trustee shall be entitled to receive the Disability
Benefit hereunder, in any case in which it is determined by a duly licensed
independent physician selected by the Bank, that the Trustee is no longer
able, properly and satisfactorily, to perform his regular duties as a
Trustee because of ill health, accident, disability or general inability
due to age. If the Trustee's service is terminated pursuant to this
Subsection and Board of Trustee approval is obtained, the Trustee may elect
to begin receiving the Disability Benefit in lieu of the Deferred
Compensation Benefit, which is not available prior to the Trustee's Benefit
Eligibility Date. The benefit shall begin within thirty (30) days of Board
of Trustees' approval of such benefit. The amount of the monthly benefit
shall be the annuitized value of the Trustee's Elective Contribution
Account, measured as of the date of the disability determination and
payable over the Payout Period. The Post-Retirement Interest Factor shall
be used to annuitize the Elective Contribution Account. In the event the
Trustee dies while receiving Disability Benefit payments pursuant to this
Subsection, or after becoming eligible for such payments but before the
actual commencement of such payments, his Beneficiary shall be entitled to
receive those benefits provided for in Subsection 6.1(a) and the Disability
Benefits provided for in this Subsection shall terminate upon the Trustee's
death.
5.3 Removal For Cause. In the event the Trustee is removed for Cause at any
time prior to reaching his Benefit Age, he shall be entitled to receive the
balance of his Elective Contribution Account, measured as of the date of
removal. Such amount shall be paid in a lump sum within thirty (30) days of
the Trustee's date of removal. All other benefits provided for the Trustee
or his Beneficiary under this Plan shall be forfeited and the Plan shall
become null and void with respect to such Trustee.
5.4 Voluntary or Involuntary Termination Other Than for Cause. If the Trustee's
service with the Bank is voluntarily or involuntarily terminated prior to
the attainment of his Benefit Eligibility Date, for any reason other than
for Cause, the Trustee's death or disability, then commencing on his
Benefit Eligibility Date, the Trustee shall be entitled to the annuitized
value (using the Interest Factor) of his Elective Contribution Account
calculated as of his Benefit Eligibility Date, and payable over the Payout
Period.
5.5 Termination of Service Related to a Change in Control. If a Change in
Control occurs, and thereafter the Trustee's service is terminated (either
voluntarily or involuntarily) within thirty-six (36) months, the Trustee
shall be entitled to receive his Deferred Compensation Benefit calculated
as if the Trustee had made all of his elective deferrals through his
Benefit Age. Such benefit shall be annuitized (using the Interest Factor)
and be payable commencing on such Trustee's Benefit Eligibility Date in
monthly installments throughout the Payout Period. In the event the Trustee
dies at any time after termination of employment, but prior to commencement
of such payments due and owing hereunder, the Bank or its successor, shall
pay to the Trustee's Beneficiary, the Survivor's Benefit. In the event the
Trustee dies at any time after commencement of such payments, but prior to
completion of all such payments due and owing hereunder, the Bank or its
successor shall pay to the Trustee's Beneficiary, continuation of the
monthly installments for the remainder of the Payout Period.
5.6 Modification of Benefit Age. If the Trustee elects to modify his Benefit
Age ("Modified Benefit Age") and to commence receiving benefits hereunder
before attainment of his Benefit Age as set forth on his Deferral
Agreement, Trustee shall be entitled to receive the value of his Elective
Contribution Account calculated as of the last day of the month in which
Trustee attains his Modified Benefit Age, provided, however, that Trustee
must have made such an election at least thirteen (13) months prior to the
first day of the month in which Trustee attains his Modified Benefit Age
(as set forth herein at Exhibit D). Such early benefit shall be annuitized
(using the Interest Factor) and be payable commencing on the first day of
the second month following Trustee's attaining his Modified Benefit Age in
monthly installments throughout the Payout Period. In the event the Trustee
dies at any time after designating his Modified Benefit Age, but prior to
commencement of such payments due and owing hereunder, the Bank or its
successor shall pay to the Trustee's Beneficiary the Survivor's Benefit. In
the event the Executive dies at any time after commencement of the benefit
payments, but prior to completion of all such payments due and owing
hereunder, the Bank or its successor shall pay to the Trustee's Beneficiary
a continuation of the monthly installments for the remainder of the Payout
Period.
SECTION VI
DEATH BENEFITS
6.1 Death Benefit Prior to Commencement of Deferred Compensation Benefit. In
the event of the Trustee's death prior to commencement of the Deferred
Compensation Benefit, the Bank shall pay the Trustee's Beneficiary a
monthly benefit for the Payout Period, commencing within thirty (30) days
of the Trustee's death. The amount of such monthly benefit payments shall
be determined as follows:
(a) (1) In the event death occurs (i) while the Trustee is receiving the
Disability Benefit provided for in Subsection 5.2, or (ii) after the
Trustee has become eligible for such Disability Benefit payments but
before such payments have commenced, the Trustee's Beneficiary shall
be entitled to receive the Survivor's Benefit for the number of months
in the Payout Period, reduced by the number of months Disability
Benefit payments were made to the Trustee. In the event death occurs
after the Trustee has received the Disability Benefit provided for in
Subsection 5.2 for the entire Payout Period, the Trustee's Beneficiary
shall not be entitled to the Survivor's Benefit for any length of
time. However, the lump sum payment described in paragraph two (2) of
this Subsection 6.1 (a) if approved by the Board of Trustees, and the
payment described in Section 6.2, shall still be applicable to such
Beneficiary.
(2) If (i) the total dollar amount of Disability Benefit payments
received by the Trustee under Subsection 5.2 is less than the total
dollar amount of payments which would have been received had the
Survivor's Benefit been paid in lieu of the Disability Benefit which
was paid during the Trustee's life, and (ii) Board of Trustee approval
is obtained, the Bank shall pay the Trustee's Beneficiary a lump sum
payment for the difference. This lump sum payment shall be made within
thirty (30) days of the Trustee's death.
(b) In the event death occurs while the Trustee is (i) in the service of
the Bank, (ii) deferring fees pursuant to Section II and (iii) prior
to any to any reduction or discontinuance (via an effective filing of
a Notice of Adjustment of Deferral Amount) in the level of deferrals
reflected in the Trustee's Deferral Agreement, the Trustee's
Beneficiary shall be paid the Survivor's Benefit.
(c) In the event death occurs while the Trustee is (i) in the service of
the Bank, (ii) deferring fees pursuant to Section II, and (iii) after
any reduction or discontinuance (via an effective filing of a Notice
of Adjustment of Deferral Amount) in the level of deferrals reflected
in the Trustee's Deferral Agreement, the Trustee's Beneficiary shall
be paid a reduced Survivor's Benefit. The amount of such reduced
Survivor's Benefit shall be determined by multiplying the monthly
payment available as a Survivor's Benefit by a fraction, the numerator
of which is equal to the total Board fees actually deferred by the
Trustee as of his death, and the denominator of which is equal to the
total amount of Board fees which would have been deferred as of his
death, if no reduction or discontinuance in the level of deferrals had
occurred at any time following execution of the Deferral Agreement and
during the Deferral Period.
(d) In the event the Trustee completes less than One Hundred Percent
(100%) of his Projected Deferrals due to any voluntary or involuntary
termination other than removal for Cause, the Trustee's Beneficiary
shall be paid a reduced Survivor's Benefit. The amount of such reduced
Survivor's Benefit shall be determined by multiplying the monthly
payment available as a Survivor's Benefit by a fraction, the numerator
of which is equal to the total Board fees actually deferred by the
Trustee, and the denominator of which is equal to the Trustee's
Projected Deferral.
(e) In the event the Trustee completes One Hundred Percent (100%) of his
Projected Deferrals prior to any voluntary or involuntary termination
other than removal for Cause, and provided no payments have been made
pursuant to Subsection 5.2, the Trustee's Beneficiary shall be paid
the Survivor's Benefit.
6.2 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Trustee's death, the Trustee's
Beneficiary shall be entitled to receive a one-time lump sum death benefit
in the amount of Ten Thousand Dollars ($10,000.00). This benefit shall be
provided specifically for the purpose of providing payment for burial
and/or funeral expenses of the Trustee. Such benefit shall be payable
within thirty (30) days of the Trustee's death. The Trustee's Beneficiary
shall not be entitled to such benefit if the Trustee is removed for Cause
prior to death, or if a similar lump sum death benefit is paid by the Bank
to the Beneficiary under another similar plan of the Bank.
SECTION VII
BENEFICIARY DESIGNATION
The Trustee shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Deferral Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Deferral
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Deferral Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION VIII
TRUSTEE'S RIGHT TO ASSETS
The rights of the Trustee, any Beneficiary, or any other person claiming
through the Trustee under this Plan, shall be solely those of an unsecured
general creditor of the Bank. The Trustee, the Beneficiary, or any other person
claiming through the Trustee, shall only have the right to receive from the Bank
those payments so specified under this Plan. The Trustee agrees that he, his
Beneficiary, or any other person claiming through him shall have no rights or
interests whatsoever in any asset of the Bank, including any insurance policies
or contracts which the Bank may possess or obtain to informally fund this Plan.
Any asset used or acquired by the Bank in connection with the liabilities
it has assumed under this Plan, unless expressly provided herein, shall not be
deemed to be held under any trust for the benefit of the Trustee or his
Beneficiaries, nor shall any asset be considered security for the performance of
the obligations of the Bank. Any such asset shall be and remain, a general,
unpledged, and unrestricted asset of the Bank.
SECTION IX
RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any fund
or money with which to pay its obligations under this Plan. The Trustee, his
Beneficiaries or any successor in interest to him shall be and remain simply a
general unsecured creditor of the Bank in the same manner as any other creditor
having a general claim for matured and unpaid compensation. The Bank reserves
the absolute right in its sole discretion to either purchase assets to meet its
obligations undertaken by this Plan or to refrain from the same and to determine
the extent, nature, and method of any such asset purchases. Should the Bank
decide to purchase assets such as life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such assets at any time, in whole or in part. At no
time shall the Trustee be deemed to have any lien, right, title or interest in
or to any specific investment or to any assets of the Bank. If the Bank elects
to invest in a life insurance, disability or annuity policy upon the life of the
Trustee, then the Trustee shall assist the Bank by freely submitting to a
physical examination and by supplying such additional information necessary to
obtain such insurance or annuities.
SECTION X
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Trustee nor any Beneficiary under this Plan shall have any
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder,
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Trustee or his
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Trustee or any Beneficiary attempts
assignment, communication, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and terminate.
SECTION XI
ACT PROVISIONS
11.1 Named Fiduciary and Administrator. The Bank shall be the Named Fiduciary
and Administrator (the "Administrator") of this Plan. As Administrator, the
Bank shall be responsible for the management, control and administration of
the Plan as established herein. The Administrator may delegate to others
certain aspects of the management and operational responsibilities of the
Plan, including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
11.2 Claims Procedure and Arbitration. In the event that benefits under this
Plan are not paid to the Trustee (or to his Beneficiary in the case of the
Trustee's death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Administrator within
sixty (60) days from the date payments are refused. The Administrator shall
review the written claim and, if the claim is denied, in whole or in part,
they shall provide in writing, within ninety (90) days of receipt of such
claim, their specific reasons for such denial, reference to the provisions
of this Plan or the Deferral Agreement upon which the denial is based, and
any additional material or information necessary to perfect the claim. Such
writing by the Administrator shall further indicate the additional steps
which must be undertaken by claimants if an additional review of the claim
denial is desired.
If claimants desire a second review, they shall notify the Administrator in
writing within sixty (60) days of the first claim denial. Claimants may
review this Plan, the Deferral Agreement or any documents relating thereto
and submit any issues and comments, in writing, they may feel appropriate.
In its sole discretion, the Administrator shall then review the second
claim and provide a written decision within sixty (60) days of receipt of
such claim. This decision shall state the specific reasons for the decision
and shall include reference to specific provisions of this Plan or the
Deferral Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Plan and the Deferral Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered by
the AAA under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION XII
MISCELLANEOUS
12.1 No Effect on Trusteeship Rights.Nothing contained herein will confer upon
the Executive the right to be retained in the service of the Bank nor limit
the right of the Bank to discharge or otherwise deal with the Executive
without regard to the existence of the Plan. Notwithstanding anything
herein contained to the contrary, any payment to the Executive by the
Holding Company are subject to and conditioned upon their compliance with
Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section
1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.
12.2 State Law. The Plan is established under, and will be construed according
to, the laws of the state of New York.
12.3 Severability and Interpretation of Provisions. In the event that any of the
provisions of this Plan or portion thereof, are held to be inoperative or
invalid by any court of competent jurisdiction, or in the event that any
legislation adopted by any government body having jurisdiction over the
Bank would be retroactively applied to invalidate this Plan or any
provision hereof or cause the benefits hereunder to be taxable, then: (1)
insofar as is reasonable, effect will be given to the intent manifested in
the provisions held invalid or inoperative, and (2) the validity and
enforceability of the remaining provisions will not be affected thereby. In
the event that the intent of any provision shall need to be construed in
any manner to avoid taxability, such construction shall be made by the Plan
Administrator in a manner that would manifest to the maximum extent
possible the original meaning of such provisions.
12.4 Incapacity of Recipient. In the event the Trustee is declared incompetent
and a conservator or other person legally charged with the care of his
person or Estate is appointed, any benefits under the Plan to which such
Trustee is entitled shall be paid to such conservator or other person
legally charged with the care of his person or Estate.
12.5 Unclaimed Benefit. The Trustee shall keep the Bank informed of his current
address and the current address of his Beneficiaries. If the location of
the Trustee is not made known to the Bank within three (3) years after the
date on which any payment of the Deferred Compensation Benefit may first be
made, payment may be made as though the Trustee had died at the end of the
three (3) year period.
12.6 Limitations on Liability. Notwithstanding any of the preceding provisions
of the Plan, no individual acting as an employee or agent of the Bank, or
as a member of the Board of Trustees shall be personally liable to the
Trustee or any other person for any claim, loss, liability or expense
incurred in connection with this Plan.
12.7 Gender. Whenever in this Plan words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
12.8 Effect on Other Corporate Benefit Plans. Nothing contained in this Plan
shall affect the right of the Trustee to participate in or be covered by
any qualified or non-qualified pension, profit sharing, group, bonus or
other supplemental compensation or fringe benefit agreement constituting a
part of the Bank's existing or future compensation structure.
12.9 Suicide. Notwithstanding anything to the contrary in this Plan, the
benefits otherwise provided herein shall not be payable if the Trustee's
death results from suicide, whether sane or insane, within twenty-six(26)
months after the execution of his Deferral Agreement. If the Trustee dies
during this twenty-six (26) month period due to suicide, the balance of his
Elective Contribution Account will be paid to the Trustee's Beneficiary in
a single payment. Payment is to be made within thirty (30) days after the
Trustee's death is declared a suicide by competent legal authority.
Credit shall be given to the Bank for payments made prior to determination
of suicide.
12.10 Inurement. This Plan shall be binding upon and shall inure to the benefit
of the Bank, its successors and assigns, and the Trustee, his successors,
heirs, executors, administrators, and Beneficiaries.
12.11 Source of Payments. All payments provided in this Plan shall be timely
paid in cash or check from the general funds of the Bank or the assets of
the rabbi trust. The Holding Company guarantees payment and provision of
all amounts and benefits due to the Trustees and, if such amounts and
benefits are not timely paid or provided by the Bank, or the rabbi trust,
such amounts and benefits shall be paid or provided by the Holding Company.
12.12 Modification of Benefit Eligibility Date. In the event that a Trustee
desires to modify his Benefit Eligibility Date or Payout Period with
respect to future Elective Contributions, the Trustee may do so at the time
and in the manner that the Trustee is entitled to adjust his Elective
Contribution, pursuant to Section IV of the Plan. In the event that a
Trustee desires to modify his Benefit Eligibility Date or Payout Period
with respect to amounts accrued in his Elective Contribution Account the
Trustee may do so, provided, however, that any such modification is made no
later than twenty-four (24) months prior to the date of both (i) the
Trustee's existing Benefit Eligibility (at the time of such modification)
and (ii) the Trustee's Benefit Eligibility Date, as modified.
12.13 Tax Withholding. If applicable, the Bank may withhold from any benefits
payable under this Plan all federal, state, city, or other taxes as shall
be required pursuant to any law or governmental regulation then in effect.
12.14 Headings. Headings and sub-headings in this Plan are inserted for
reference and convenience only and shall not be deemed a part of this Plan.
SECTION XIII
AMENDMENT/REVOCATION
This Plan shall not be amended, modified or revoked at any time, in whole
or part, without the mutual written consent of the Trustee and the Bank, and
such mutual consent shall be required even if the Trustee is no longer serving
the Bank as a member of the Board; provided, however, mutual consent shall not
be required if such amendment or modification is required by a regulatory agency
having jurisdiction over the Bank or the Holding Company or is necessary to
avoid taxation of the benefits payable hereunder prior to their distribution or
is desirable or required pursuant to Section 12.3 hereof.
SECTION XIV
EXECUTION
14.1 This Plan sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the
subject matter hereof are merged into and superseded by this Plan.
14.2 This Plan shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies shall
together constitute one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the Bank has caused this Plan to be executed on the day and
date first above written.
ATTEST: PATHFINDER BANK
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
ATTEST: PATHFINDER BANCORP, INC.
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
ATTEST: PATHFINDER BANCORP, MHC
/s/ Melissa A. Miller By: /s/ Thomas W. Schneider
- ------------------------ -----------------------
Secretary Title: President and CEO
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, Steven W. Thomas, and PATHFINDER BANK hereby agree for good and valuable
consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $750 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $90,000. I
understand that this election to defer applies only to fees attributable to
services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $5,356 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ Steven W. Thomas /s/ Thomas Schneider
- ----------------------- ----------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Marianne Thomas
----------------
SECONDARY BENEFICIAY: Brandon and Evan Thomas equally per
----------------------------------------
stirpes
-------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: _________________, 20 ___
/s/ Thomas Schneider /s/ Steven W. Thomas
- ---------------------- -----------------------
WITNESS TRUSTEE
/s/ James A. Dowd
- --------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, L. William Nelson, Jr., and PATHFINDER BANK hereby agree for good and
valuable consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent ( _____%) or $750 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred fourteen (114) months, known as the
Deferral Period, and will result in a Projected Deferral in the amount of
$85,500. I understand that this election to defer applies only to fees
attributable to services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $1,413 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ L. William Nelson /s/ Thomas Schneider
- ------------------------ ----------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Loretta Sue Nelson
--------------------
SECONDARY BENEFICIAY: Aimee L. Callen, Wendy Wheeler, John L.
---------------------------------------------
Nelson, equal
--------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: January 20, 2004
/s/ W. J. Landers /s/ L. William Nelson
- -------------------- ------------------------
WITNESS TRUSTEE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, Bruce E. Manwaring, and PATHFINDER BANK hereby agree for good and
valuable consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $417 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of ninety-one (91) months, known as the Deferral Period,
and will result in a Projected Deferral in the amount of $37,917. I understand
that this election to defer applies only to fees attributable to services not
yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $582 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ Bruce E. Manwaring /s/ Thomas W. Schneider
- ------------------------- --------------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Ellen K. Manwaring, Spouse
-----------------------------
SECONDARY BENEFICIAY: Children Doug, Derek, Mike, Karin per
------------------------------------------
stirpes
-------
This Beneficiary Designation hereby revokes any prior Beneficiary Designation
which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: January 20, 2004
/s/ W. J. Landers /s/ Bruce E. Manwaring
- -------------------- -------------------------
WITNESS TRUSTEE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, Chris R. Burritt, and PATHFINDER BANK hereby agree for good and valuable
consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $750 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $90,000. I
understand that this election to defer applies only to fees attributable to
services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $2,858 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ Chris R. Burritt /s/ Thomas Schneider
- ----------------------- ----------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Susan Burritt
--------------
SECONDARY BENEFICIAY: My Children - Andrea Burritt, Danielle
-------------------------------------------
Burritt, Richard Burritt, Jennifer White
--------------------------------------------
This Beneficiary Designation hereby revokes any prior Beneficiary Designation
which may have been in effect.
Such Beneficiary Designation is revocable.
DATE:
/s/ W. J. Landers /s/ Chris R. Burritt
- -------------------- -----------------------
WITNESS TRUSTEE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, Corte J. Spencer, and PATHFINDER BANK hereby agree for good and valuable
consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent ( _____%) or $750 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred four (104) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $78,000. I
understand that this election to defer applies only to fees attributable to
services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $1,248 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ Corte J. Spencer /s/ Thomas W. Schneider
- ----------------------- --------------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: My daughters equally per stirpes
------------------------------------
Cathleen S. Dorr, Mary M. Spencer, Sara A.
-------------------------------------------------
Spencer
-------
SECONDARY BENEFICIARY:
- -----------------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE:
/s/ W. J. Landers /s/ Corte J. Spencer
- -------------------- -----------------------
WITNESS TRUSTEE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT A
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
DEFERRAL AGREEMENT
I, George P. Joyce, and PATHFINDER BANK hereby agree for good and valuable
consideration, the value of which is hereby acknowledged, that I shall
participate in the Pathfinder Bank Trustee Deferred Fee Plan (the "Plan"),
effective December 31, 2003, as such Plan may now exist or hereafter be amended
or modified, and do further agree to the terms and conditions thereof.
I hereby elect to defer ________ Percent (_____ %) or $750 of my monthly
Trustee Fees. Such deferrals shall commence on January 1, 2004, and shall
continue for a period of one hundred twenty (120) months, known as the Deferral
Period, and will result in a Projected Deferral in the amount of $90,000. I
understand that this election to defer applies only to fees attributable to
services not yet performed.
I understand that my election to defer shall continue in accordance with
this Deferral Agreement until such time as I submit a "Notice of Adjustment of
Deferral" (Exhibit C hereto) to the Administrator, at least fifteen (15) days
prior to any January 1st during my Deferral Period. A Notice of Adjustment of
Deferral can be used to adjust the amount of Trustee fees to be deferred or to
discontinue deferrals altogether.
In general, I understand that my designated Beneficiary may be entitled to
a monthly Survivor's Benefit of $2,457 pursuant to section 6.1 of the Plan and
subject to all relevant subsections of the Plan.
I understand that I will be entitled to a distribution of my deferrals upon
attainment of my elected Benefit Age of 70. Distribution will be made in
installments over a period of one hundred twenty (120) months.
I understand that I am entitled to review or obtain a copy of the Plan, at
any time, and may do so by contacting the Committee.
This Deferral Agreement shall become effective upon execution (below) by
both the Trustee and a duly authorized officer of the Bank.
Dated this 31st day of December, 2003.
/s/ George Joyce /s/ Thomas Schneider
- ------------------ ----------------------
Trustee Duly Authorized Officer of Pathfinder Bank
EXHIBIT B
PATHFINDER BANK
TRUSTEE DEFERRED FEE PLAN
BENEFICIARY DESIGNATION
The Trustee, under the terms of the Pathfinder Bank Deferred Fee Plan
hereby designates the following Beneficiary to receive any guaranteed payments
or death benefits* under such Plan, following his death:
PRIMARY BENEFICIARY: Christine A. Joyce
--------------------
SECONDARY BENEFICIARY: Children equally per stirpes - George,
-------------------------------------------
Jennifer, Kathleen, Christopher
---------------------------------
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE:
/s/ W. J. Landers /s/ George Joyce
- -------------------- ------------------
WITNESS TRUSTEE
/s/ Thomas Schneider
- ----------------------
WITNESS
* I understand and agree that no death benefit in excess of the deferrals
made by me (plus earnings thereon) will be paid unless Pathfinder Bank has
acquired insurance on my life and such insurance is in place.
EXHIBIT 31.1
Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Thomas W. Schneider, President and Chief Executive Officer, certify
that:
1. I have reviewed this quarterly report on Form 10-Q of Pathfinder Bancorp,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
May 14, 2004 /s/ Thomas W. Schneider
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Date Thomas W. Schneider
President and Chief Executive Officer
EXHIBIT 31.2
Rule 13a-14(a) / 15d-14(a) Certification of the Chief Financial Officer
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James A. Dowd, Vice President and Chief Financial Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Pathfinder Bancorp,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
May 14, 2004 /s/ James A. Dowd
- -------------- --------------------
Date James A. Dowd
Vice President and Chief Financial Officer
EXHIBIT 32.1
Section 1350 Certification of the Chief Executive and Chief Financial Officer
Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Thomas W. Schneider, President and Chief Executive Officer, and James A. Dowd,
Vice President and Chief Financial Officer of Pathfinder Bancorp, Inc. (the
"Company"), each certify in his capacity as an officer of the Company that he
has reviewed the Quarterly Report of the Company on Form 10-Q for the quarter
ended March 31, 2004 and that to the best of his knowledge:
1. the report fully complies with the requirements of Sections 13(a) of
the Securities Exchange Act of 1934; and
2. the information contained in the report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
The purpose of this statement is solely to comply with Title 18, Chapter 63,
Section 1350 of the United States Code, as amended by Section 906 of the
Sarbanes-Oxley Act of 2002.
May 14, 2004 /s/ Thomas W. Schneider
- -------------- --------------------------
Date Thomas W. Schneider
President and Chief Executive Officer
May 14, 2004 /s/ James A. Dowd
- -------------- --------------------
Date James A. Dowd
Vice President and Chief Financial Officer