SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 2006
Pathfinder Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Federal 000-23601 16-1540137
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
Registrant's telephone number, including area code: (315) 343-0057
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Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Section 2 - Financial Information
Item 2.02
On July 31, 2006, Pathfinder Bancorp, Inc. issued a press release disclosing
second quarter 2006 financial results. A copy of the press release is included
as Exhibit 99.1 to this report.
The information in Item 2.02 to this Form 8-K and Exhibit 99.1 in accordance
with general instruction B.2 of Form 8-K, is being furnished and shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934,
nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except shall be
expressly set forth by specific in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PATHFINDER BANCORP, INC.
Date: July 31, 2006 By: /s/ Thomas W. Schneider
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Thomas W. Schneider
President and Chief Executive Officer
EXHIBIT INDEX
Earnings release dated July 31, 2006 announcing June 30, 2006 earnings.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: Thomas W. Schneider - President, CEO
James A. Dowd - Vice President, CFO
Telephone: (315) 343-0057
PATHFINDER BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS
Oswego, New York, July 31, 2006 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) reported net income of $303,000, or $0.12 per share, for the
three months ended June 30, 2006 as compared to $234,000, or $0.10 per share for
the same period in 2005. For the six months ended June 30, 2006, the Company
reported net income of $543,000, or $0.22 per share, compared to $383,000, or
$0.16 per share, for the same period in 2005.
"We continue to be pleased by our improvement in earnings, particularly in light
of the current interest rate cycle," stated Thomas W. Schneider, President and
C.E.O. "Rising short-term interest rates have continued to compress net
interest margin, however, a 16% increase in core non-interest income, a 4%
reduction in operating expenses, and continued improvement in asset quality
helped to boost net income by 42% over the prior year. "
Net interest income for the quarter ended June 30, 2006 decreased 8% when
compared to the same period during 2005. Interest expense increased $327,000,
or 21%, partially offset by an increase in interest income of $145,000, or 4%.
Net interest rate spread decreased to 2.93% for the second quarter of 2006 from
3.17% for the same period in 2005. Average interest-earning assets decreased 3%
to $273.9 million in the quarter ended June 30, 2006 as compared to $281.2
million in the quarter ended June 30, 2005, while the yield on those assets
increased 34 basis points to 5.81% compared to 5.47% for the same period in
2005. The decrease in average earning assets is primarily attributable to an
$11.1 million decrease in average investment securities, partially offset by a
$4.5 million, or 2%, increase in average loans receivable. Average
interest-bearing liabilities decreased $8.8 million, while the cost of funds
increased 59 basis points to 2.88% from 2.29% for the same period in 2005. The
decrease in the average balance of interest-bearing liabilities resulted
primarily from a $10.0 million, or 5%, reduction in average deposits, partially
offset by a $1.2 million increase in average borrowed funds. The reduction in
deposits principally occurred in the municipal money management accounts due to
the cyclical nature of the tax collections and expenditures of local municipal
entities.
The sharp increase in cost of funds can be attributed to the 200 basis point
increase in short-term interest rates over the past 12 months, combined with a
$7.8 million deposit migration from lower earning savings accounts to higher
yielding certificates of deposit.
Provision for loan losses for the quarter ended June 30, 2006 decreased 99% to
$1,000 from $66,000 for the same period in 2005. The Company's ratio of
allowance for loan losses to period end loans has decreased to 0.86% at June 30,
2006 from 0.89% at December 31, 2005. Nonperforming loans to period end loans
have decreased to 0.73% at June 30, 2006, compared to 0.89% at December 31,
2005. Overall, asset quality has improved significantly over the past two years
through a combination of tightened credit administration and more robust
collection activities.
Non-interest income, net of gains and losses from the sale of securities, loans
and foreclosed real estate, increased 13% to $616,000 for the quarter ended June
30, 2006 compared to $546,000 for the same period in the prior year. The
increase in non-interest income is primarily attributable to increases in
service charges on deposit accounts, loan servicing fees, other charges,
commissions and fees and earnings on bank owned life insurance of $31,000,
$19,000, $14,000 and $6,000, respectively.
Operating expenses decreased 8% to $2.3 million for the quarter ended June 30,
2006 compared to $2.5 million for the quarter ended June 30, 2005. During the
second quarter of 2006, professional and other services, salaries and employee
benefits, other expenses and data processing expenses decreased $106,000,
$70,000, $30,000 and $13,000, respectively. These decreases were offset by a
$19,000 increase in building occupancy expenses. The decrease in professional
and other expenses was primarily due to costs associated with a company wide
leadership training program and process improvement initiatives that occurred in
2005. The decrease in salaries and employee benefits was primarily due to the
personnel realignment in December of 2005 and a reduction in stock based
compensation expense, offset by the salaries and benefits associated with
personnel at the new Central Square branch location. Data processing expenses
were lower primarily due to a reduction in Internet banking and ATM processing
charges. The decrease in other expenses was primarily attributable to a
decrease in the purchase of office supplies, decreased costs associated with "no
cost home equity loans" and a reduction in mortgage recording tax expense. The
increase in building occupancy primarily resulted from costs associated with the
operation of the new Central Square branch that opened in May of 2005.
Pathfinder Bancorp, Inc. is the mid-tier holding company of Pathfinder Bank, a
New York chartered savings bank headquartered in Oswego, New York. The Bank has
seven full service offices located in its market area consisting of Oswego
County. Financial highlights for Pathfinder Bancorp, Inc. are attached.
Presently, the only business conducted by Pathfinder Bancorp, Inc. is the 100%
ownership of Pathfinder Bank and Pathfinder Statutory Trust I.
This release may contain certain forward-looking statements, which are based on
management's current expectations regarding economic, legislative, and
regulatory issues that may impact the Company's earnings in future periods.
Factors that could cause future results to vary materially from current
management expectations include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and economic, competitive,
governmental, regulatory, and technological factors affecting the Company's
operations, pricing, products, and services.
PATHFINDER BANCORP, INC.
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
For the three months For the six months
ended June 30, ended June 30,
(Unaudited) (Unaudited)
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2006 2005 2006 2005
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CONDENSED INCOME STATEMENT
Interest income $ 3,932 $ 3,787 $ 7,797 $ 7,485
Interest expense 1,853 1,526 3,601 3,025
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Net interest income 2,079 2,261 4,196 4,460
Provision for loan losses 1 66 23 138
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Net interest income after provision for loan losses 2,078 2,195 4,173 4,322
Other income 606 546 1,199 1,035
Other expense 2,310 2,510 4,721 4,930
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Income before taxes 374 231 651 427
Provision for income taxes 71 (3) 108 44
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Net income $ 303 $ 234 $ 543 $ 383
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KEY EARNINGS RATIOS
Return on average assets 0.40% 0.30% 0.36% 0.25%
Return on average equity 5.85% 4.38% 5.19% 3.57%
Return on average tangible equity (A) 7.33% 5.51% 6.49% 4.50%
Net interest margin (tax equivalent) 3.10% 3.28% 3.12% 3.25%
SHARE AND PER SHARE DATA
Basic weighted average shares outstanding 2,463,132 2,452,537 2,463,132 2,449,889
Basic earnings per share $ 0.12 $ 0.10 $ 0.22 $ 0.16
Diluted earnings per share 0.12 0.09 0.22 0.15
CASH EARNINGS PER SHARE - BASIC (B) 0.14 0.12 0.25 0.20
Cash dividends per share 0.1025 0.1025 0.205 0.205
Book value per share - - 8.35 8.37
(Unaudited) (Unaudited) (Unaudited)
June 30, December 31, June 30, June 30,
2006 2005 2005 2004
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SELECTED BALANCE SHEET DATA
Assets $ 296,953 $ 296,948 $ 310,471 $ 299,875
Earning assets 267,520 266,198 277,927 271,247
Total loans 192,850 189,568 187,943 186,210
Deposits 232,071 236,377 237,239 233,853
Borrowed Funds 36,260 31,360 43,260 36,360
Trust Preferred Debt 5,155 5,155 5,155 5,155
Shareholders' equity 20,579 20,928 21,678 21,049
ASSET QUALITY RATIOS
Net loan charge-offs (annualized) to average loans 0.05% 0.24% 0.09% 0.18%
Allowance for loan losses to period end loans 0.86% 0.89% 1.00% 0.99%
Allowance for loan losses to nonperforming loans 117.51% 99.94% 92.61% 60.88%
Nonperforming loans to period end loans 0.73% 0.89% 1.08% 1.62%
Nonperforming assets to total assets 0.78% 0.82% 0.94% 1.11%
(A) Tangible equity excludes intangible assets
(B) Cash earnings excludes noncash charges for amortization relating to
intangibles and the allocation of ESOP stock:
For the three months For the six months
ended June 30, ended June 30,
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2006 2005 2006 2005
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Net Income $ 303 $ 234 $ 543 $ 383
Add back (net of tax effect):
Amortization of intangibles 34 34 67 67
Stock-based compensation - 18 - 38
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Cash earnings $ 337 $ 286 $ 610 $ 488
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