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): October 27, 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 October 27, 2006, Pathfinder Bancorp, Inc. issued a press release disclosing
third 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: October 27, 2006 By: /s/ Thomas W. Schneider
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Thomas W. Schneider
President and Chief Executive
Officer
EXHIBIT INDEX
Earnings release dated October 27, 2006 announcing September 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 THIRD QUARTER EARNINGS
Oswego, New York, October 27, 2006 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) reported net income of $170,000, or $0.07 per share, for the
three months ended September 30, 2006 as compared to $116,000, or $0.05 per
share for the same period in 2005. For the nine months ended September 30,
2006, the Company reported net income of $713,000, or $0.29 per share, compared
to $499,000, or $0.20 per share, for the same period in 2005.
"An earnings improvement of approximately 43% over the first nine months of 2006
is a result of the positive execution of a number of our strategic initiatives",
stated Thomas W. Schneider, President and CEO. "We are progressing with our
plans to restructure our balance sheet through the growth of commercial loans;
control our costs; and increase our non-interest income. Over the past 9
months, commercial loans have risen 15%, operating expenses have been reduced
4% and core non-interest income has grown 9%."
"Earnings, however, are still well below our performance objectives and
expectations," Mr. Schneider continued. "Even with a pause by the Federal
Reserve Bank in raising Fed Fund target rates, we expect net-interest margin
compression to continue over the next 6 months and we expect to progress in our
strategic plan to combat these forces in the near term and produce added value
over the intermediate and long term."
Net interest income for the quarter ended September 30, 2006 decreased 7% when
compared to the same period during 2005. Interest expense increased $283,000,
or 17%, partially offset by an increase in interest income of $138,000, or 4%.
Net interest rate spread decreased to 2.91% for the third quarter of 2006 from
3.06% for the same period in 2005. Average interest-earning assets decreased 3%
to $270.3 million in the quarter ended September 30, 2006 as compared to $279.6
million in the quarter ended September 30, 2005, while the yield on those assets
increased 40 basis points to 5.94% compared to 5.54% for the same period in
2005. The decrease in average earning assets is primarily attributable to a
$14.4 million decrease in average investment securities, partially offset by a
$5.0 million, or 3%, increase in average loans receivable. Average
interest-bearing liabilities decreased $9.7 million, while the cost of funds
increased 54 basis points to 3.03% from 2.49% for the same period in 2005. The
decrease in the average balance of interest-bearing liabilities resulted
primarily from an $8.3 million, or 19%, reduction in borrowed funds, and a $4.8
million, or 6%, reduction in average deposits. The reduction in borrowed funds
is primarily attributable to the pay off of several short-term advances in the
fourth quarter of 2005 and the third quarter of 2006. 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 175 basis point
increase in short-term interest rates over the past 12 months, combined with a
$8.2 million deposit migration from lower earning savings accounts to higher
yielding certificates of deposit.
Provision for loan losses for the quarter ended September 30, 2006 decreased
100% from the same period in 2005. The Company's ratio of allowance for loan
losses to period end loans has decreased to 0.83% at September 30, 2006 from
0.97% at September 30, 2005. Nonperforming loans to period end loans have
decreased to 0.69% at September 30, 2006, compared to 0.88% at September 30,
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, decreased 4% to $573,000 for the quarter ended
September 30, 2006 compared to $599,000 for the same period in the prior year.
The decrease in non-interest income is primarily attributable to decreases in
service charges on deposit accounts, loan servicing fees and other charges,
commissions and fees of $18,000, $6,000, $8,000, respectively. These decreases
were offset by an increase in earnings on bank owned life insurance of $6,000.
Operating expenses decreased 4% to $2.4 million for the quarter ended September
30, 2006 compared to $2.5 million for the quarter ended September 30, 2005.
During the third quarter of 2006, professional and other services, other
expenses and building occupancy decreased $51,000, $44,000 and $27,000,
respectively. These decreases were offset by increases of $17,000 and $3,000 in
salaries and employee benefits and data processing expenses, respectively. 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 other expenses
was primarily attributable to lower expenses on other real estate owned, a
reduction in office supplies and a reduction in costs associated with no cost
closing loans. The decrease in building occupancy was primarily due to a
reduction of machine maintenance expenses and expenses associated with branch
facility improvements that did not recur in 2006.
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 nine months
ended September 30, ended September 30,
(Unaudited) (Unaudited)
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2006 2005 2006 2005
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CONDENSED INCOME STATEMENT
Interest income $ 3,967 $ 3,829 $ 11,764 $ 11,314
Interest expense 1,910 1,627 5,511 4,652
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Net interest income 2,057 2,202 6,253 6,662
Provision for loan losses - 91 23 229
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Net interest income after provision for loan losses 2,057 2,111 6,230 6,433
Other income 544 449 1,743 1,484
Other expense 2,391 2,493 7,112 7,423
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Income before taxes 210 67 861 494
Provision for income taxes 40 (49) 148 (5)
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Net income $ 170 $ 116 $ 713 $ 499
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KEY EARNINGS RATIOS
Return on average assets 0.23% 0.15% 0.32% 0.22%
Return on average equity 3.21% 2.16% 4.53% 3.10%
Return on average tangible equity (A) 3.98% 2.71% 5.64% 3.90%
Net interest margin (tax equivalent) 3.11% 3.21% 3.12% 3.24%
SHARE AND PER SHARE DATA
Basic weighted average shares outstanding 2,463,482 2,461,328 2,463,250 2,453,744
Basic earnings per share $ 0.07 $ 0.05 $ 0.29 $ 0.20
Diluted earnings per share 0.07 0.05 0.29 0.20
Cash dividends per share 0.1025 0.1025 0.3075 3.075
Book value per share - - 8.67 8.76
(Unaudited) (Unaudited) (Unaudited)
September 30, December 31, September 30, September 30,
2006 2005 2005 2004
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SELECTED BALANCE SHEET DATA
Assets $ 298,003 $ 296,948 $ 303,076 $ 303,029
Earning assets 268,550 266,198 272,290 274,207
Total loans 197,463 189,568 185,459 187,788
Deposits 237,921 236,377 240,852 236,731
Borrowed Funds 30,660 31,360 32,360 35,360
Trust Preferred Debt 5,155 5,155 5,155 5,155
Shareholders' equity 21,365 20,928 21,578 21,953
ASSET QUALITY RATIOS
Net loan charge-offs (annualized) to average loans 0.06% 0.24% 0.18% 0.17%
Allowance for loan losses to period end loans 0.83% 0.89% 0.97% 1.00%
Allowance for loan losses to nonperforming loans 120.58% 99.94% 109.75% 63.94%
Nonperforming loans to period end loans 0.69% 0.89% 0.88% 1.57%
Nonperforming assets to total assets 0.62% 0.82% 0.85% 1.06%
(A) Tangible equity excludes intangible assets